Two people familiar with the matter said that Chrysler Group LLC., has contacted banks to borrow money before a possible initial public offering in 2011. Chrysler currently owes the U.S. and Canadian governments $7.4 billion.
Fiat SpA currently owns 20 percent of Chrysler. CEO Sergio Marchionne said that interest on the debt which is owed to U.S. and Canadian government has kept the automaker from earning profits in the first half of 2010 and that Fiat can’t have majority stake in Chrysler until the money has been repaid.
Chrysler is now looking to refinance U.S. and Canadian government loans as it moves to consider the proper debt level for the company. The Auburn Hills automaker approached banks about the valuation and loans in recent months, sources said.
Last week, Marchionne said that he is in no immediate need to exercise the move of acquiring 51 percent of Chrysler.
– By: Omar Rana