Banks Extend Chrysler Credit

Chrysler Corp. said Tuesday that its banks agreed to extend for three years the $6.8-billion credit line the auto maker needs to fund its latest comeback.

Chrysler made a number of concessions in recent days to persuade the last of 152 banks to go along with the loan package.

The money will be used primarily by Chrysler Financial Corp., a subsidiary that supports dealer inventories and lends money to individual buyers of new cars.

Chrysler was forced to seek help from its banks because its poor credit rating kept the auto maker from selling bonds to raise cash.

“This was a complex and difficult agreement to reach, but it couldn’t have come at a better time,” Chairman Lee A. Iacocca said in a statement. “Getting this behind us will allow us to focus on keeping the flow of outstanding products coming.”

Chrysler Financial agreed to reduce by $2 billion, to $4.8 billion, the amount it is borrowing by March 31, 1993. It is in the process of selling $3 billion worth of non-automotive assets, including its Chrysler First consumer finance subsidiary, that will bring in badly needed cash.