DETROIT, MI. -- Chrysler Group CEO Sergio Marchionne said Thursday that repaying its U.S. and Canadian government loans will boost the automaker’s brands.

“There’s not a single doubt in my mind that once we repay the U.S. and Canadian governments the perception of our brands will improve,” Marchionne said. “It will be a great accomplishment if we can get it all done within two years since we came out of bankruptcy.

Marchionne, who also serves as CEO of Italy carmaker Fiat SpA, made his comments to reporters after he and U.S. Treasury Secretary Timothy Geithner toured the company’s Jefferson North assembly plant, which builds the Jeep Grand Cherokee.

Earlier in the day, Chrysler announced its intention to repay $7.5 billion in government loans by the end of June — a moved that was hailed as good news by Canadian union leaders and politicians for a company facing collapse less than three years ago.

Chrysler said it plans to repay the Canadian, Ontario and U.S. governments loans from proceeds of a new term loan facility and newly-issued debt securities to be offered and sold to institutional investors in a private offering exempt from registration under the U.S. Securities Act of 1933.

The refinancing will raise Fiat’s stake in the automaker from 30 per cent to 46 per cent. It also sets the stage for an initial public offering which could take place later this year or in 2012.

“I feel really good (about it),” said Ontario Finance Minister Dwight Duncan. “It just reconfirms the wisdom of the decision that our government and other governments took in terms of making that investment two years ago.

“Many people opposed it, many people thought it was wrong, but now we have a viable company with a good product mandate,” said Duncan. “I believe strongly in a good future here in Windsor, Brampton and right across North America for the Chrysler Corporation."

Chrysler owes US$5.3 billion to the U.S. government and US$2.1 billion to the Canadian and Ontario governments. Earlier this week, Duncan said the $450 million owed to the province by the automaker would be put toward the province’s $16.3 billion deficit.

Ken Lewenza, president of the Canadian Auto Workers union, said it’s good news because “it signals renewed confidence in a company which just a few years ago couldn’t get a dime from anybody.

“Now there are financial institutions willing to provide loans to help the company get out from under the fairly significant interest levels attached to their government loans.”

Lewenza said he hoped Chrysler’s significant interest savings would be reinvested in plants and products because “you can have the best management team in the world and the best employees in the industry but it doesn’t matter if you don’t have products.

“Clearly that’s improving because the Jeep Cherokee appears to be a home run, the 300 seems to be a home run and there’s growing interest in the Fiat 500,” said Lewenza.

Once the loans are paid, the Canadian governments will own 1.7 per cent, the U.S. Treasury 6.6 per cent and the United Auto Workers union’s health care trust 45.7 per cent.

Marchionne said he was confident that banks and institutional investors will be willing to refinance the automaker’s government loans. “The markets are there now and our performance is consistent with the objectives we set for ourselves. So I think it’s time to close the loop for what has been an incredibly necessary intervention.”

Marchionne would not disclose what banks the company is talking to except to say that “a lot of work remains to be done.” Getting out from under punishing interest rates on the government loans was a major reason Marchionne decided to seek a refinancing package.

When Fiat owns 46 per cent of Chrysler, the U.S. government’s stake will fall from 9.2 per cent to 6.6 per cent, Canada’s will drop from 2.3 per cent to 1.7 per cent and the UAW’s Retiree Medical Trust will own 45.7 per cent.

On Monday, Chrysler will announce its first quarter results.