AUBURN HILLS, Mich., June 22 (UPI) -- U.S. automaker Chrysler said it has refinanced a $2.9 billion loan and a $1.3 billion line of credit that would create a net savings of $20.5 million.
The refinancing will reduce Chrysler's interest payments by $50 million, but to do so Chrysler had to pay $29.5 million in fees for closing out its prior loan early, The Wall Street Journal reported Saturday.
The refinancing with its lenders allows the automaker, which had $11.9 billion in cash at the end of the first quarter, to make $1 billion in restricted payments to Fiat, Chrysler's controlling owner, which is struggling due to an extended recession in Europe.
The automaker, which had taken out loans in 2011 to pay off the bailouts from the U.S. and Canadian governments, said it acted now to "take advantage of market conditions and its [Chrysler's] improved credit profile."
Specifically, the refinancing was negotiated in advance of the Federal Reserve's expected unwinding of an $85 billion per month asset purchasing program that has been keeping interest rates low.
Terms of the new loan allow Chrysler to pay Fiat three times what it could pay under terms of its previous loan, but only if it earns $2.2 billion this year, which it is projected to do, the Journal said.
Fiat said Friday it had renegotiated a three-year $2.68 billion line of credit from lenders, which replaces a line of credit it had established in 2011.
