With a few computer keystrokes, Chrysler Group LLC sent $7.6 billion to the U.S. and Canadian governments on Tuesday, paying off most of the bailout money that saved the company from financial disaster just two years ago.
The repayment was another sign of the automaker's comeback. In 2009, Chrysler almost ran out of cash and went into bankruptcy. Now it's got a spiffy lineup of Jeeps and cars and just earned its first profit in five years.
"A lot of us remember that until just a short time ago, in the eyes of most, Chrysler had been condemned to death," CEO Sergio Marchionne told more than 1,000 workers gathered at a Chrysler factory outside Detroit. The group was celebrating paying back the government.
The repayment means Chrysler removes the stigma of being a government ward. But it must stand on its own now. It also needs to keep overhauling a lineup that still depends on old Chrysler designs and larger vehicles that could fall out of favor because of high gasoline prices.
Chrysler took $10.5 billion from the U.S. government to survive two years ago, and earlier had repaid some of the money. On Tuesday, it retired a $5.9 billion balance on the U.S. loans and $1.7 billion to the governments of Canada and Ontario.
"Chrysler's repayment of its outstanding loans to the U.S. Treasury and American taxpayers marks a significant milestone for the turnaround of Chrysler and the countless communities and families who rely on the American auto industry," President Barack Obama said in a statement.
To pay off the governments, Chrysler raised $3.2 billion through a bond sale and took out $3 billion in lower-interest bank loans. It also will use a $1.3 billion investment from Italian automaker Fiat SpA, which kicked in the money on Tuesday. That raises Fiat's stake to 46 percent, making it the largest shareholder.
The U.S. government gave Fiat a 20 percent stake and management control of Chrysler after the Detroit automaker emerged from bankruptcy protection in 2009.
Ron Bloom, Obama's assistant for manufacturing policy, said Chrysler repaid the loans far faster than anyone expected. "I don't think anybody two years ago would have said this day would happen," he told reporters at the company's factory in Sterling Heights, Mich., where the Chrysler 200 and Dodge Avenger are built.
But government ownership doesn't end with the loan repayment. The U.S. Treasury still owns 6.6 percent of Chrysler, part of the original stake it got in exchange for the bailout.
Also, about $2 billion of the government aid went to parts of Chrysler that were left behind in bankruptcy, and that money hasn't been repaid. Some of it could be recouped when the government sells its stake either in a public stock offering or to Fiat, which has an option to buy it.
The government, Bloom said, will sell its stake as soon as practical, but he conceded the administration doesn't expect to get a "material portion" of the $2 billion back.
Chrysler was eager to pay back its loans in part because of the governments' high interest rates of around 12 percent, which cost the company $1.2 billion last year. The interest rates on the new loans and bonds are 6 to 8 percent, saving Chrysler $300 million a year. The company also wanted to shed its government ownership because some customers object to the bailout.
The loan repayment was sent at 10:13 a.m. It went from the banks and Fiat to Chrysler's accounts and was transferred to the governments electronically, a Chrysler spokeswoman said.
It lifted the morale of Chrysler workers and dealers who just two years ago came close to losing everything.
Cheers erupted at the Sterling Heights factory when Bloom announced that the money had changed hands.
Many employees wore buttons with the word "PAID" on them, along with Tuesday's date.
Charles Mason, who has worked on the assembly line for only six months, said he's ecstatic.
"I feel like it does give me job security," said Mason, 34, of Southfield, Mich. "I'm happy to be a part of it."
Carl Galeana, who runs Chrysler and Fiat dealerships in Michigan and Florida, told an Associated Press reporter on Monday that Marchionne has done everything he promised to save the company. Vehicles such as the Jeep Grand Cherokee SUV, which was overhauled by Chrysler, have helped the company return to profitability.
But Galeana and others know the company's future success depends on models from Fiat, especially small and midsize cars, segments where Chrysler remains unproven.
"What we have to prove to the public is we have damn fine products," he said. "That's the kind of stuff that's coming through the pipeline."
Chrysler's action is the latest in the comeback of the Detroit auto industry after the recession put its future in doubt. General Motors Co. also went through bankruptcy and got a $49.5 billion U.S. bailout in exchange for giving the government a 61 percent equity stake. The Treasury Department now owns 26.5 percent of GM after selling part of the stake in November.
The third Detroit automaker, Ford Motor Co., didn't seek a bailout.
It's not the first time Chrysler had to be rescued by the U.S. government. In the early 1980s the company, led by legendary pitchman Lee Iacocca, paid off $1 billion in government-guaranteed loans in three years.