Chrysler lines up money to pay U.S.

DETROIT - Chrysler Group L.L.C. could repay most of its government loans as early as Tuesday after raising $7.5 billion from bank loans and bond sales.

Chrysler said last month that it intended repay the U.S. and Canadian governments during the second quarter. It announced the financial details Thursday.

Chrysler would issue $3.2 billion in bonds to investors in two tranches: $1.5 billion in eight-year notes with an 8 percent interest rate and $1.7 billion in 10-year notes with an 8.25 percent interest rate. Chrysler also would take out $4.3 billion in bank loans: a $3 billion term loan and a $1.3 billion revolving credit facility.

It had hoped the package would include $3.5 billion in bank loans and $2.5 billion in bonds. But when chief executive officer Sergio Marchionne and other executives went on the road pitching the debt deal in recent weeks, the bonds were popular, and interest in lending money to Chrysler wasn't as strong.

The Detroit automaker also will use a $1.3 billion investment from Italian automaker Fiat SpA to repay its loans. Fiat, which has had management control since Chrysler emerged from bankruptcy protection in 2009, paid that amount last month to increase its stake in Chrysler to 46 percent.

Chrysler took $10.5 billion from the U.S. government to survive two years ago and has repaid some of the money. The refinancing will allow it to retire a $5.9 billion balance on the U.S. loans and $1.6 billion to the governments of Canada and Ontario.

The company has said it is eager to separate itself from the government and improve its image, which was tarnished by the bailout. It also has said the government's interest rates, which average 12 percent, are costing it more than it would have to pay on the open market.

The government loans cost Chrysler $1.2 billion in interest last year, or more than $3 million a day. The new loans allow Chrysler to borrow money at 4.75 percent over the London interbank offered rate, subject to a Libor floor of 1.25 percent. That would put its interest rates around 6.

Chrysler spokeswoman Shawn Morgan said that Chrysler had not announced the date it would repay the government, but that it could transfer funds to the U.S. Treasury as early as Tuesday if the deals closed as expected.