Chrysler to pay off $7.5 billion in debt

NEW YORK (CNNMoney) -- Chrysler plans to pay back $7.5 billion worth of high-interest bailout loans to the U.S. and Canadian governments on Tuesday.
This includes the $5.8 billion the carmaker owes in loans to U.S. taxpayers and the $1.7 billion it owes to the Canadians.

• 
  
• 
  
• 
  

• Print

This doesn't mean that Chrysler is debt-free. In fact, the automaker took out additional loans last week to help pay off older debt. But the company said it could save $300 million in annual interest payments through refinancing.
Under its current debt structure, Chrysler is paying between 7% and 14% interest on U.S. loans and as high as 20% interest on some of its Canadian loans.
In February, Sergio Marchionne, the CEO of Chrysler and Fiat, the Italian automaker that owns a controlling stake in Chrysler, said his company needs to replay "shyster loans" to the governments. He later apologized for his comments.

Chrysler to pay back loans

On May 2, Chrysler reported its first quarterly profit since 2006. In fact, Ford (F, Fortune 500) and General Motors (GM, Fortune 500) also reported profits for the first quarter, the first time since 2004 the Big Three all reported profitable quarters.
Repayment of the loans will still leave U.S. taxpayers about $2 billion short, in shares that are still held by the U.S. government. Treasury and the Canadian government will both continue to hold minority stakes in the company.
The U.S. government might be able to recoup some of that money when Chrysler holds an initial public offering later this year or next.