Terms are set by Chrysler Group on one loan refinancing which will clear path for Fiat of Italy to buy rest of US carmaker which it doesn’t own already.
Company is trying to have interest cost cut on the $3bn term loan B with $52M to $60M each year. Under this proposal, the pricing is aimed to be cut by Chrysler to LIB+300 till 325, with 1% Libor floor with 1.25% floor from LIB+475, according to banking sources.
It is expected that new loan would carry one-hundred-one protection that is soft call for 6 months. On May 2007, it is expected maturity would stay unchanged.
Latest refinancing transaction is being led by Citi as well as Morgan Stanley, Goldman Sachs and Merrill Lynch, Bank of America. On June 18, at 5 p.m, it is the Lender commitments due. On 21st of June is the closing expected.
The loan refinancing of Chrysler is 2nd part of a process involving 3 stages and that includes 1.95bn euro refinancing with the existing debt of Fiat as well as one probable M&A financing to back the possible bid of Fiat for the rest left of Chrysler.
58.5% of Chrysler is owned by Fiat and is attempting to buy remaining 41.5% which it doesn’t own already and merge 2 manufacturers into world’s 7th largest group of auto by sales.
the loans of Chrysler and Fiat were thought to get refinanced before summer and advantage could be taken of the strong conditions of loan market to have the borrowing costs cut and flexibility built inn to permit potential acquisition of going ahead.
Management teams combined are led already for both of the companies by Fiat S.p.A’s CEO and Chrysler Group LLC’s CEO and chairman, Sergio Marchionne.Amending the payments clause, which is restricted in the present credit agreement including 50% net consolidated income to match notes that are second-lien, is also planned by Chrysler. Amendments are also sought by company to covenant positions that are negative and some certain definitions.
Investors Service by Moody did upgrade Chrysler to B1 from B2 in February this year.Ratings regarding corporate family tend to be B1/B+, with the facility ratings being Ba1/BB.During May of 2011, repayment of 7.6bn dollars was announced by Chrysler Group LLC in the outstanding Canadian and US loans of government following completion of latest refinancing package.
This financing included in notes $3.2bn, $1.3bn revolver and B term $3bn tranche loan. Term loan got issued with 1.25% Libor floor as well as 99 discount at original issue, at LIB+475 spread. The loan matures by May 2017 along with being priced with 102 call protection in 1st year and dropping in this year’s June to 101.
Revolver got undrawn from 31st March.Formed in the year 2009, Chrysler Group LLC had the aim to establish with the Fiat S.p.A a worldwide strategic alliance. Chrysler is maker of SRT, Ram, Mopar, Dodge, Jeep and Fiat products and vehicles