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$1.9B of 'old' Chrysler's loan repaid

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$1.9B of 'old' Chrysler's loan repaid

David Shepardson and Alisa Priddle / The Detroit News

Washington -- The old Chrysler repaid the U.S. government $1.9 billion of a $4 billion loan used to help keep the troubled automaker afloat.

The payment came from Chrysler Holding, the former owner of Chrysler LLC. Chrysler Holding still owns Chrysler Financial LLC, the former finance arm of the automaker.

The partial repayment clears the way for Cerberus Capital Management LP, the principal owner of Chrysler Holding, to find a use for Chrysler Financial.

Cerberus, a New York private equity firm, acquired an 80.1 percent stake in Chrysler and its finance arm in 2007.

When the Bush administration loaned $4 billion to Chrysler LLC in 2009, it slapped a $2 billion lien on Chrysler Financial.

Chrysler defaulted on the loan when it filed for bankruptcy, but the government pursued payment from Chrysler Financial. When the automaker exited bankruptcy last year, the new company, Chrysler Group LLC, assumed just $500 million.

The government and outside reports predicted the Treasury would forfeit the entire $4 billion, and Monday's announcement acknowleges the government will lose at least $1.6 billion.

With the partial repayment, the government extinguished the company's debtor-in-possession loan of $1.9 billion provided by the Treasury to the old Chrysler.

The Treasury Department said that while the repayment "is less than face value, (it) is significantly more than the Treasury expected to recover on this loan."

Chrysler Financial is expected to wind down by the end of 2011.

A Treasury spokeswoman, Meg Reilly, said Chrysler Financial's parent, CGI Holdings, repaid the amount "with both distributions from Chrysler Financial and contributions from its equity owners."

Cerberus spokesman Peter Duda declined comment on the payment; Chrysler Financial did not return calls.

In January 2009, separate from the $4 billion loan, the Treasury provided a $1.5 billion loan to Chrysler Financial. It was fully repaid with interest in July 2009.

Cerberus' equity in Chrysler Group was wiped out during the bankruptcy.

The U.S. government owns 9.9 percent of Chrysler Group's equity. Chrysler has $5.7 billion outstanding with Treasury and $1.2 billion in outstanding Canadian government loans. It also has $2.4 billion in undrawn government loans -- $2 billion from the Treasury.

Chrysler's first government payment is due next year and the automaker has said it will repay its bill, in full, by 2014.

From The Detroit News: http://www.detnews.com/article/20100518/AUTO01/5180327/1148/auto01/$1.9B-of--old--Chrysler-s-loan-repaid#ixzz0oHeg6DXu

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Chrysler Financial payment received

U.S. loss is smaller than anticipated

BY JUSTIN HYDE

FREE PRESS WASHINGTON STAFF

WASHINGTON -- The remnants of Chrysler left behind in bankruptcy have repaid $1.9 billion of the $4 billion lent by the U.S. government to keep the automaker alive at the end of 2008, the U.S. Treasury said Monday, leaving the government with a smaller-than-expected $2.1-billion loss.

The unexpected payment came from Chrysler Financial as it winds down its business and satisfies the last of the debt outstanding from it and the "old" Chrysler. The "new" Chrysler still has a $7.1-billion loan from the U.S. Treasury, which also owns 9.9% of the automaker.

The Treasury said of the $14.3 billion it had given Chrysler in total since late 2008, it had earned back $3.9 billion so far including Monday's payment, nearly all of which has come from Chrysler Financial. The payment was significantly more than the Treasury had expected to receive from the loan, which had been written off as part of Chrysler'sbankruptcy.

Members of the Obama auto task force have maintained that the loans granted to Chrysler and General Motors by the Bush administration were likely to be written off as losses, as the money was used to keep the companies in business until their bankruptcies in 2009.

link:

http://www.freep.com/article/20100518/BUSINESS01/5180307/1210/BUSINESS01/Chrysler-Financial-payment-received

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Chrysler makes $1.9B payment to the Treasury Department

05/17/2010, 6:54 PM BY MARK KLEIS

Chrysler has made another payment to the U.S. government towards the $14.3 billion in loans received from the Troubled Asset Relief Program. The payment exceeded the expected amount, and brings Chrysler’s total amount repaid to $3.9 billion.

The Associated Press is reporting that Chrysler has made a payment of $1.9 billion to the Treasury Department, and the agency said that the payment has already exceeded what they anticipated recovering.

The loan payment made by Chrysler was for a loan issued on January 2, 2009, while President Bush was still in office. The loan was part of a temporary solution to allow both Chrysler and General Motors to remain in business until the next president could spend the necessary time to determine a permanent solution.

To date, Chrysler and GM have received $85 billion in aid from the federal government, and as of March, the Congressional Budget Office (CBO) estimated that the government would likely fail to recover approximately $34 billion of that amount.

The U.S. government currently owns just over 60 percent of GM, and 10 percent of Chrysler. The Treasury Department hopes to recover the majority of the aid it has provided the automakers through their future initial public stock offerings, which may come as soon as late 2010 for GM, and 2011 for Chrysler.

link:

http://www.leftlanenews.com/chrysler-makes-1-9b-payment-to-the-treasury-department.html

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