Chrysler Repays Michigan Loan of $150 Million Early

Nearly three years after its celebrated early payback of $1.2 billion in federally guaranteed loans, Chrysler repaid a $150-million emergency loan from the state of Michigan on Monday--nine years ahead of schedule.

The repayment on the loan, issued by Chrysler’s home state in 1980 in order to provide a quick-fix cash infusion, rids the auto maker’s balance sheet of one of the last remnants of its brush with bankruptcy in the early 1980s.

Borrowed From 4 States

Along with its $1.2-billion federal bail-out, Chrysler borrowed a total of $207 million during its most harrowing days in 1980 and 1981 from four states in which it had major manufacturing operations--Michigan, Delaware, Indiana and Illinois.

A $5-million loan from Delaware was repaid in 1983; Illinois was repaid in 1984. The very last of Chrysler’s public borrowings, a $32-million loan from Indiana, is scheduled to be repaid when it comes due in July.

Chrysler Vice Chairman Gerald Greenwald said at a press conference here Monday that the loans from Michigan and the other states were crucial. “When that loan from Michigan was put into Chrysler’s hands, it did mean, literally, the difference between life and death,” he said.

While Chrysler has long since recovered financially (it had a cushion of more than $3.2 billion in cash and marketable securities on hand at the end of the first quarter), the auto maker hadn’t tried previously to repay its Michigan and Indiana loans because they carried relatively favorable interest rates.