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CHRYSLER REPORTEDLY SEEKING BANK LOANS AHEAD OF STOCK OFFERING

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CHRYSLER REPORTEDLY SEEKING BANK LOANS AHEAD OF STOCK OFFERING

By Andrew Ganz

Unlike crosstown rival General Motors, which will launch its initial public offering this month, fellow federal bailout recipient Chrysler is still months away from going public again.

Before it does, however, Chrysler will reportedly ask banks for loans in order to reduce the amount of interest it is paying on its current debt. Chrysler says that it is effectively paying between 14 and 20 percent interest on loans it received from the governments of the United States and Canada.

Yet the goal isn’t just to reduce debt. Chrysler shareholder – and major product controller – Fiat can’t take a larger stake in the automaker until last year’s loans are paid off.

Fiat and Chrysler chief Sergio Marchionne said that Chrysler will need to refinance its government loans as part of its plan to reach a proper operating debt level. Chrysler will likely keep around $3 billion in cash for working capital.

Chrysler’s plan to acquire more loans hardly comes as a surprise; GM recently obtained a $5 billion revolving line of credit.

link:

http://www.leftlanenews.com/chrysler-reportedly-seeking-bank-loans-ahead-of-stock-offering.html

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