$1.5 Billion TARP Loan Made to Chrysler Financial
A special purpose entity created by Chrysler Financial will receive a $1.5 billion Treasury Department loan through TARP's Automotive Industry Financing Program in order to finance the extension of new consumer auto loans. Chrysler Holding will serve as a guarantor for certain covenants of Chrysler Financial, and the loan will be secured by the Treasury Department's senior secured interest in a pool of newly originated automotive loans. The loan also requires Chrysler Financial to adhere to certain executive compensation and corporate governance requirements of the Emergency Economic Stabilization Act. Interest on the five-year loan will accrue at an annual rate of one month LIBOR + 100 basis points during the first year, with the spread increasing to 150 basis points in years two through five. Additionally, the new Chrysler Financial special purpose entity will issue warrants to the Treasury Department. Click here for further details contained in the term sheet, and click here for today's press release.
