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Chrysler reports first profit since 2009


Chrysler Group LLC reported its first quarterly net profit since the company emerged from a U.S.-funded bankruptcy nearly two years ago and came under the management control of Italian automaker Fiat SpA.

Chrysler also gave further details on its refinancing of $7.5 billion US of loans owed to the United States and Canada stemming from its 2009 bailout.

Its first-quarter net income came to $116 million, compared with a net loss of $197 million a year earlier.

Revenue shot up 35 percent to $13.1 billion, spurred by the company's 16 new and revamped models, including the Jeep Grand Cherokee and the Chrysler 300. The company also started selling the Fiat 500 small car during the quarter.

The company reported an operating profit of $477 million in the first quarter, compared with $143 million a year earlier.

Chrysler also reiterated its full-year outlook, saying it aimed to post revenues of $55 billion and net income between $200 million and $500 million.

Sergio Marchionne, the chief executive of Chrysler and Fiat, has said the company would need to post "a couple" quarters of net income before an initial public offering, which could come this year or next.

Until now, Chrysler has posted a string of operating profits, but high interest rates on loans the company owes to the United States and Canada undercut its ability to post net income.

The company also said Monday that it would borrow $3.5 billion in a senior secured six-year term loan and $2.5 billion in secured bonds that will have eight- and 10-year maturities.

Chrysler plans to use the term loan, bonds and $1.27 billion in cash from Fiat to refinance its government loans during the second quarter.

The company also confirmed plans to secure a $1.5 billion five-year revolving credit facility, as sources previously told Reuters.

In the past two years, the company overhauled its vehicle lineup and recently spurred renewed buzz for its flagship brand with a Super Bowl ad, bearing the tagline "Imported from Detroit."

A refinancing deal would bolster Chrysler's balance sheet, making it more attractive in an IPO. The deal also paves the way for Fiat to take majority control of the U.S. automaker.

Fiat currently has a 30-percent stake. Marchionne has said Fiat plans to exercise an option to buy a 16 percent stake in Chrysler for $1.27 billion during the second quarter, which will be used to refinance Chrysler's government debt. CTV Two CTV News CTV News Channel BNN - Business News Network CP24