Chrysler Group LLC detailed terms of a bond offering and term loan on Thursday that will be used to repay high-cost government loans and put the U.S. automaker on firmer financial ground.
In all, Chrysler raised $7.5 billion: $3.2 billion in bonds, $3 billion in a term loan and a $1.3 billion revolving credit facility, the company said in a statement on Thursday.
The bonds and the term loan, which total $6.2 billion, coupled with $1.3 billion in cash from Italian automaker Fiat SpA
Chrysler's revolving credit facility will be used for general corporate purposes and will remain undrawn.
The Auburn Hills, Michigan-based company owes the United States and Canada $7.5 billion in loans that stem from Chrysler's bankruptcy restructuring in 2009.
The refinancing is expected to happen on May 24, the company confirmed in a press release.
Chrysler will issue the bonds in two parts: an eight-year tranche worth $1.5 billion and a 10-year tranche worth $1.7 billion. The first part carries an 8 percent interest rate, while the 10-year bond has a 8.25 percent interest rate.
The term loan facility will allow Chrysler to borrow funds at 4.75 percentage points over the London interbank offered rate, subject to a Libor floor of 1.25 percent.
(Reporting by Deepa Seetharaman; Editing by Gary Hill)