Chrysler Repays Uncle Sam: Will Welfare Work?
Chrysler filed bankruptcy two years ago. The auto giant was on the verge of collapsing. But now Chrysler will soon pay back its bailout money of $7.5 billion to the US and Canadian governments.
The maker of minivans and Jeeps is in the process of negotiating a refinancing deal with Morgan Stanley (NYSE:MS), Goldman Sachs Group Inc (NYSE:GS), Citigroup Inc (NYSE:C) and Bank of America Corporation (NYSE:BAC). That’s smart considering Chrysler paid $1.2 billion in interest expenses last year with an average interest rate of 12 percent. Chrysler also plans to raise funds by getting credit from banks (NYSE:XLF) and an upcoming bond sale.
Chrysler and rival General Motors Company (NYSE:GM) have faced a lot of legitimate criticism for needing government handouts to keep their dismal businesses alive. Only time will tell whether Ford (NYSE:F), Toyota Motors (NYSE:TM), and Honda Motors (NYSE:HMC) will pay a hefty price for competing with welfare recipients.