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post #1 of 2 (permalink) Old 02-17-2012, 08:04 AM Thread Starter
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Chrysler Pulls Energy Loan Application

Chrysler Pulls Energy Loan Application as Financials Improve

February 17, 2012

Chrysler Group LLC withdrew its application for U.S. Energy Department loans after the government tightened its lending standards and the company’s financial standing improved.

Chrysler “remains confident in its strategy to bring competitive, fuel-efficient vehicles and technologies to market on schedule,” the Auburn Hills, Michigan-based company said yesterday in a statement. The decision won’t impact Chrysler’s ability to achieve its financial targets, the company said.

Sergio Marchionne, chief executive officer of Chrysler and majority-owner Fiat SpA, told reporters Feb. 4 that the automaker was seeking less than $3.5 billion in loans from the government’s Section 136 program, which encourages production of fuel-efficient vehicles. He said the department’s due diligence process was reflecting “some of the deals they’ve done,” without making specific mention of loan recipients such as Solyndra LLC that have filed for bankruptcy protection.

“Sergio lost patience,” Richard Hilgert, a Chicago-based analyst for Morningstar Equity Research, said in a phone interview. “The company is now on solid financial ground and really no longer needs to have the DOE loans. They would have been at very attractive rates, but the market has very low interest rates right now and they could probably borrow at very attractive rates without these loans.”

Profit Forecast

Chrysler, which is 58.5 percent owned by Turin-based Fiat, forecast on Feb. 1 that earnings may double this year after reporting its first full-year profit since exiting bankruptcy in 2009. The company earned $734 million in 2011 excluding costs associated with paying back the U.S. and Canadian government loans.

Marchionne plans to introduce technology such as natural- gas powered vehicles in the U.S. to help meet 2025 regulatory standards that call for the average fuel economy to rise to 54.5 miles per gallon. The automaker expects to begin selling an electric version of the Fiat 500 small car by early next year.

“While we were continuing to work with Chrysler to come to an agreement, we are pleased that they are capable of achieving their business goals without department support,” Damien LaVera, an Energy Department spokesman, said yesterday in an e- mail. “The company’s decision to move forward without this loan reflects the tremendous financial turnaround that Chrysler and its workers have achieved.”

Ener1, Solyndra Failures

Ener1 Inc., the maker of batteries for electric cars whose subsidiary received a $118 million Energy Department grant, in January filed for bankruptcy protection after defaulting on bond debt amid Asian competition. Ener1’s bankruptcy followed the failure of at least two U.S. government-backed renewable energy companies, the solar-panel maker Solyndra and energy-storage company Beacon Power Corp.

Ford Motor Co., the second-largest U.S. automaker, received $5.9 billion of Energy Department loans in June 2009. Nissan Motor Co. borrowed $1.6 billion, and Tesla Motors Inc. was loaned $495 million at that time. General Motors Co., which also emerged from bankruptcy in 2009, withdrew its application for $14.4 billion in loans in January 2011.

Marchionne signaled at the North American International Auto Show in Detroit in January that Chrysler might withdraw its request for loans if the amount made available by the government was “too restrictive.” Borrowing from the U.S. likely would impair Chrysler’s ability to “refinance itself” for the term of the loans, he said.

The U.S. Treasury Department and Canadian government, which backed Chrysler’s bankruptcy, exited their holdings in the company in July when Fiat paid $625 million to boost its stake to 53.5 percent on a fully diluted basis. Fiat increased its ownership to 58.5 percent in January after a commitment to build a 40-mpg rated Dodge Dart compact car in Belvidere, Illinois.



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post #2 of 2 (permalink) Old 02-17-2012, 08:05 AM Thread Starter
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Chrysler Group Statement Regarding Department of Energy Advanced Technology Vehicles Manufacturing Loan Application

February 16, 2012 , Auburn Hills, Mich.

- Chrysler Group LLC has decided to withdraw its application for an Advanced Technology Vehicles Manufacturing loan from the Department of Energy. The Company remains confident in its strategy to bring competitive, fuel-efficient vehicles and technologies to market on schedule. This decision will not impact Chrysler's ability to achieve its previously announced business plan targets.

Since it was formed in June 2009, Chrysler Group LLC has announced investments of more than $4.5 billion; added more than 9,400 jobs; repaid U.S. Treasury and Canadian government loans in full, with interest, six years early; launched 16 new or significantly refreshed vehicles in our first 19 months; launched production of the all-new C-segment Dodge Dart, which is being built in the U.S. using a Fiat-based architecture and fuel-efficient technology; and in 2011, Chrysler Group U.S. sales increased 26 percent, the largest percentage sales gain of any full-line manufacturer.

Forward-Looking Statements
This document contains forward-looking statements that reflect management's current views with respect to future events. The words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should” and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties, including, but not limited to: the effective implementation of the Chrysler Group LLC 2010 – 2014 Business Plan outlined on November 4, 2009, including successful vehicle launches; industry SAAR levels; continued economic weakness, especially in North America, including continued high unemployment levels and limited availability of affordably priced financing for our dealers and consumers; introduction of competing products and competitive pressures which may limit our ability to reduce sales incentives; supply disruptions resulting from natural disasters and other events impacting our supply chain; and our ability to realize benefits from our industrial alliance with Fiat. If any of these or other risks and uncertainties occur, or if the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. We do not intend or assume any obligation to update any forward-looking statement, which speaks only as of the date on which it is made. Further details of potential risks that may affect Chrysler Group are described in Chrysler Group’s Form 10, as amended, and its subsequent periodic reports filed with the SEC.


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