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Government to write off most of $4B Chrysler loan

WASHINGTON – The U.S. government will likely lose much of the $4-billion loan it gave Chrysler LLC at the end of last year as part of its bankruptcy case, officials said today.

The Bush administration was unable to secure its loans to any assets, and will recover only as much as any other unsecured debtors. It also may lose part of the $1.5 billion lent to Chrysler Financial backed by auto loans.

The Obama administration also said new Chrysler will be funded through a total of $10.5 billion in loans, with $8.08 billion from the United States and $2.42 billion from the Canadian government.

"We appreciate the close and cooperative relationship between the U.S. and Canadian governments during this period of restructuring in the auto industry,” President Barack Obama said in a statement. “Together, we have put in place a financing package that will give Chrysler a chance to achieve financial viability.”

The Obama administration says fixing Chrysler’s debts is the main objective of the bankruptcy filed today. It will use money from the $700-billion financial industry bailout to fund up to $3.3 billion in bankruptcy court financing and $4.7 billion in loans for Chrysler to exit and launch its partnership with Fiat.

The $2 billion that’s been offered to secured creditors in return for canceling $6.9 billion in debt will come from a mix of U.S. and Canadian money, officials said.

Article:Government to write off most of $4B Chrysler loan | | Detroit Free Press
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