Chrysler CEO Marchionne wants to pay back bailout loans before 2nd anniversary of bankruptcy.
Chrysler CEO Sergio Marchionne is hoping to write a couple checks that will add up to $7.5 billion – and he hopes to have the ink dry before June 10th, the second anniversary of the automaker’s emergence from Chapter 11 bankruptcy protection.
“We will repay every dollar that was lent to us by the American and Canadian governments, with interest,” Marchionne said, during a commencement speech to 900 students graduating from the University of Toledo.
Marchionne confirmed that Chrysler would pay back the loans, late last month, though he initially didn’t set a timeline. Chrysler first had to line up alternative lenders to cover the debt.
The move has both symbolic and very real value. Chrysler is still struggling to overcome the stigma of having gone into bankruptcy, emerging only with the help of a multi-billion bailout from the U.S. and Canadian governments. Paying off the loans – immediately after posting a $116 million first-quarter profit, its first since going bankrupt – would be a sign of an impending turnaround.
Chrysler also hopes to reduce its costs since the government charged a relatively high interest rate for the risky bailout loan.
Once the notes are paid off, meanwhile, Italian partner Fiat will be eligible to acquire another 16% of the U.S. automaker, bringing its stake to 46%. Marchionne then hopes to meet the final hurdle set as part of the bailout, which would boost Fiat’s holdings to 51%.
Addressing the graduating students at the University of Toledo, Marchionne said that personal achievement should be seen as only one goal. Understanding the changes sweeping through the Middle East and other parts of the world is another.
“You are tomorrow’s leaders and as such, you have a duty to expand your minds and look beyond the walls of your office,” he declared.