Originally the plan was to pay back the governments with three separate payments. One payment has already been paid; the U.S. Treasury charged Chrysler with $1.3 billion in interest in 2010.
[Rewind: Michigan Chrysler Dealers Hear Chrysler Posts Net Loss for 2010, but 2011 Outlook Brighter]
The next two payments were scheduled for 2014 and the final in 2017. In a press release, Chrysler CEO Sergio Marchionne commented on the corporation’
Fiat was also another big supporter that helped Chrysler get through the bankruptcy. Originally Fiat received 20 percent interest in Chrysler by offering management, engineering, technical expertise and even global distribution. This year the number raised by 10 percent as Fiat received a higher stake in the company.
Chrysler is seeking to take out $2.5 billion in new debt from institutional investors to secure a $3.5-billion, six-year loan and a $1.5 billion line of credit to pay off the current financial loans. Also, Fiat is investing an additional $1.27 billion to help Chrysler with its repayment.
With the loans being repaid, the ownership structure of Chrysler will also shift.
• A UAW health care trust currently has 59.2 percent
• Fiat 30 percent
• U.S. Treasury 8.6 percent
• Canadian governments 2.2 percent
• Fiat will have 51 percent
• UAW trust 41.5 percent
• U.S. Treasury 6 percent
• Canada 1.5 percent
Although Chrysler seems to be back on track, the bankruptcy had harsh effects on the company and its associates as tens of thousands of jobs were lost, four plants were closed and 749 dealerships were shut down. Dealerships included dozens of Michigan Chrysler dealers; 14 specifically in the Detroit area.
The outlook has changed as Chryslers’ remaining dealerships are making more money, there are thousands of workers that have been rehired, a factory was saved and there are more vehicles that have been added to the Chrysler lineup to bring back customers. It is expected that Chrysler will report its first profitable quarter since 2009 once the April sales numbers are available.
Michigan Chrysler dealers were not the only dealerships to see their corporation struggle as General Motors’ dealers lived through a bankruptcy as well. There is good news for GM as it may overtake Toyota Motor Corp and reclaim its title as No. 1 largest automaker.
[Rewind: Michigan GMC Dealers Could See GM Reclaim Top Spot from Toyota, First Time Since 2008]
Check back with MI Auto Times as we continue to cover the recovery of the auto industry.
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[Source(s): The Detroit News, Detroit Free Press]