DETROIT — Chrysler will take out bank loans and sell bonds to repay $7.5 billion in bailout money from the U.S. and Canadian governments, another sign that the company is recovering from its near collapse in 2009.
Details about how much Chrysler will borrow from banks and the size of the bond sale are being worked out. Terms could be disclosed Monday.
Chrysler plans to repay the government loans this quarter through a refinancing package. The deal would allow Chrysler to return a big chunk of the money to the U.S. and Canada, which loaned the company the money two years ago to help it survive bankruptcy. The refinancing also allows Chrysler to save millions of dollars in interest payments and is a major step toward an initial public stock offering that could come late this year or in early 2012.
Chrysler has come a long way since slipping into bankruptcy protection two years ago. It has since slashed costs and is selling more vehicles, such as the popular Jeep Grand Cherokee SUV, big improvements for a company whose survival was once in question.
Chrysler has been trying for months to refinance the government loans, which cost the company $1.2 billion in interest payments last year. The company’s CEO has said the loans carry average interest rates of around 12 percent, far higher than it can get on the open market.
The loans have been a problem for Chrysler and the Obama administration, which approved the bulk of the U.S. bailout. The loans also have turned off some customers who are unhappy with the government aid for Chrysler and its Detroit rival General Motors.
For Obama, the refinancing would repay a big piece of what the U.S. loaned to Chrysler, eliminating at least part of a thorny political issue ahead of the 2012 presidential campaign. Chrysler took a total of $10.5 billion from the U.S. government.
