Chrysler Group LLC is working to refinance what its chief executive characterized as shyster loans that the Obama administration extended as part of a bailout to keep the automaker from collapse in 2009.
I want to pay back the shyster loans, Sergio Marchionne said at an industry conference, using a derogatory term for an unethical lawyer or politician. Pay back the loans, get those out and then take (the company) public.
Marchionne, who is also CEO of Italy's Fiat SpA
In 2010, Chrysler paid $1.23 billion, or about $3.4 million a day, in interest payments. He described those payments as a thorn in my side, adding that Chrysler had no choice but to take the loans at the height of the financial crisis.
A Chrysler spokesman declined to comment on Marchionne's use of the term shyster.
When we did this deal back in 2009, we couldn't have borrowed a buck from a 7-Eleven store. The banking system was shut, Marchionne said of the bailout.
Marchionne used the term shyster at least three times when discussing the interest rates on the debt owed to the U.S. Treasury during his nearly hour-long appearance at an industry conference with auto dealers, journalists and analysts.
The sharp tone from an executive regarded as one of the shrewdest dealmakers in the auto industry comes after delays in Chrysler's application for a new round of low-interest loans from the U.S. government.
Marchionne said Chrysler was in the final stages of discussions with the Department of Energy on its application for up to $3.5 billion loans. A deal in principle to access the new loans was still possible by March, he said.
Chrysler applied for the Department of Energy loans in 2009 and executives had expected the funding by the end of 2010.
The Energy Department loans would allow Chrysler to borrow at essentially the same rate as the federal government and allow the automaker pay back higher-interest financing on the $5.7 billion it owes the U.S. Treasury.
The bailout loans carry a premium. Chrysler pays 7.2 percent on one tranche of its Treasury loan worth more than $2 billion and 10.55 percent on another $3.5 billion.
FIAT, CHRYSLER MERGER POSSIBLE
At the height of the financial crisis, Obama administration officials led by Steve Rattner and Ron Bloom debated whether Chrysler was worth saving.
The company ultimately filed for a bankruptcy brokered by the White House and was put under the management of Fiat in exchange for Marchionne's pledge to restructure the weakest of the U.S. automakers with Fiat's small-car know-how and international distribution.
Marchionne said that in the next two to three years Chrysler and Fiat could ultimately merge into one company, adding, For all I know it could be based here.
Marchionne is credited with reviving Fiat, whose brands include Ferrari, Maserati and Alfa Romeo.
Last year, Volkswagen AG
As long as I'm the CEO of both Fiat and Chrysler, Mr. Piech will never get an offer, Marchionne said during the J.D. Power event.
Marchionne said Fiat was looking to redimension its joint venture with Indian automaker Tata Motors
Tata Motors CEO Carl-Peter Forster was quoted as saying this week that he is unhappy with sales under the partnership.
Likewise, Marchionne said when reporters asked about Forster's comments. That's why it's on the table, and we're going to discuss it.
(Reporting by Deepa Seetharaman; Editing by Matthew Lewis)