The US automaker, which is now a part of the newly formed entity of Fiat Chrysler Automobiles, announced it came to an agreement on a new financing, in which it aims to raise $4.8 billion in a lower-cost debt that would allow it to pay off the UAW Retiree Medical Benefits Trust and also save money.
Back in 2009, while emerging from bankruptcy, the Chrysler Group secured a $4.6-billion loan from the UAW’s Retiree Medical Benefits Trust at a 9% interest rate. After that it made annual payments of $400 million in 2012, $300 million in 2011 and $315 million in 2010 on the loan but also raised its interest to around $120 million annually.
Now, Chrysler stated it wants to use proceeds of the new debt to pay off what it owes to the trust. The company has priced $1.375 billion in senior debt due in 2019 at 108.25% of their aggregate principal at a 6.2% interest rate. Chrysler also priced a $1.38-billion senior bond, redeemable in 2021 at 110.50% of principal at a 6.4% interest rate.
The US automaker also previously announced its intention to gain additional senior secured term loans to cash up to $2 billion, while also saying all of the additional offerings would be considered as a single series of debt.