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Chrysler Debt To Be Refinanced By June

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On: Mon, Apr 11, 2011 at 3:24PM | By: Tim Healey

Chrysler Debt To Be Refinanced By June

Chrysler expects to have its debt refinanced by June, which would pave the way for Fiat to take a majority stake in the company.

Currently, Chrysler owes $7 billion to the U.S. and Canadian governments. Chrysler is hoping to have the debt refinanced by June, so that Fiat can become the majority owner. The Italian automaker cannot take ownership until the governments are paid back.

Fiat needs to take an additional 16 percent stake beyond what it owns currently, and it may use its own money to pay for the 16 percent.

CEO Sergio Marchionne would like Fiat to have a 51 percent stake in time for an initial public offering. There have been plans for an IPO in 2011, but it could be pushed back to 2012.

Fiat currently has a 25 percent stake in Chrysler and is likely to boost that to 30 percent in coming days. Fiat's stake should be boosted to 35 percent in the fourth quarter of this year. That plus 16 percent will give it the 51 percent it needs to take majority ownership.

Marchionne told Automotive News he was happy with Chrysler's performance through the first quarter of this year, and that the company should meet its goal of $2 billion in operating profit.

It's long been expected that Chrysler would be eventually be taken over by Fiat, as part of its road back from bankruptcy. These steps help move the company closer to that reality.


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