Latest Automotive News

Subscribe in a reader





Banks postpone US$12 billion Chrysler finance plan after market balks

Email   small font medium font large font

Google
 
Web AutoNews24h.com

NEW YORK (AP) _ Investment banks raising funds for the turnaround of Chrysler Group postponed a US$12-billion debt offer after investors balked, so they will now fund the bulk themselves to keep the automaker's sale on track, people familiar with the matter said Wednesday.

The banks, which include Goldman Sachs Group Inc. and JPMorgan Chase & Co. and two Canadian companies, will fund about $10 billion of the deal, said the people, who could not comment on the record because they were not authorized to speak publicly.

Other banks that will split the $10-billion financing include Citigroup Inc., Morgan Stanley, Bear Stearns Cos., Toronto-Dominion Bank (TSX:TD) and Royal Bank of Canada (TSX:RY). They could not immediately be reached for comment.

Cerberus Capital Management _ the buyer _ and DaimlerChrysler _ the seller _ will together fund the other $2 billion. The banks will take a second-lien position behind Cerberus and Daimler, which means that Cerberus and Daimler would collect first in any default.

The move had been expected by Wall Street, as investors have become more reticent to buy into deals because of woes in the home-mortgage market and less demand for high-yield debt.

Cerberus plans to raise about $62 billion in total as part of a plan to recapitalize Chrysler and refinance old debt.

A spokesman for Cerberus would not comment about the new financing plan, but said the acquisition of an 80 per cent stake in Chrysler Group is still on track to close in the coming days.

DaimlerChrysler chief financial officer Bodo Uebber was asked about the issue during a conference call about the Mercedes Car Group and decline to comment on the financing and loan situation. Chairman Dieter Zetsche also declined to comment but insisted the deal was on track to close as scheduled.

Bankers have had a better time raising about $6 billion in loans for Chrysler's finance unit, according to people familiar with the matter who were not authorized to speak publicly on that deal. Though terms had to be sweetened, that financing _ along with the $12 billion raised by the banks, Cerberus and DaimlerChrysler _ is expected to close on Aug. 3.

Chrysler Group is planning a massive celebration to mark its return to American control hands after nine years of ownership by the German-based automaker. Cerberus, one of the largest U.S. buyout shops, announced in May it would pay $7.4 billion to buy the company from Daimler.

Cerberus's bid to buy Chrysler is a stunning reversal of the takeover of the Jeep and Dodge maker by Daimler Benz AG in 1998. Although it was billed as a merger that would create a global automotive powerhouse, the corporate cultures clashed and the companies never fully integrated their operations.

DaimlerChrysler shares rose $2.25, or 2.5 per cent, to $91.70 in midday trading.

Receive the latest automotive news by email!

Enter your email address:


Related news
BRUSSELS, Belgium (AP) _ EU regulators have given Cerberus Capital Management the go-ahead for its purchase of the money-losing Chrysler car division from DaimlerChrysler AG. The European Commission approved the US$7.4-billion deal automatically because ...
FRANKFURT, Germany (AP) _ The Mercedes Car Group of DaimlerChrysler AG saw its pre-tax profit nearly double in the second quarter, the German-American automaker said Wednesday. The company said the Mercedes unit earned ...
From Daimler-Benz to DaimlerChrysler and now ... just plain old Daimler. Many shareholders are sighing in relief as DaimlerChrysler goes through the formality of shedding ``Chrysler'' from its letterhead _ a final farewell to ...
FRANKFURT, Germany (AP) _ What's in a name? For German automaker DaimlerChrysler AG, it's a lot of history and a brand identity nurtured carefully for the greater part of a century. When it ...
BERLIN (AP) _ Automaker DaimlerChrysler AG said Friday it has completed the transaction to sell a majority stake in its U.S. Chrysler arm to private equity firm Cerberus. Shareholders will be asked to ...
RED DEER, Alta. (CP) _ Auto repair finance specialist Rifco Inc. (TSXV:RFC) warned Wednesday that it expects to book a $300,000 net loss or two cents per share in 2006 but expects ...
Audi AG, the luxury automaker owned by Volkswagen AG, said Wednesday that Chief Financial Officer Rupert Stadler will take over as its chief executive on Jan. 1. Stadler will replace ...
FRANKFURT, Germany (AP) _ Volkswagen says its profit in the first six months of 2007 rose by more than 65 per cent. Europe's biggest automaker by sales says it earned 2.69 (b) billion ...
Operating actions announced July 15 remain on track, targeted at $10 billion in cash improvements through 2009 Asset sales of $2-4 billion in process, including Hummer, ACDelco and Strasbourg ...
Daimler AG, which sold off most of its Chrysler division earlier this year, has spent US$5.1 billion to buy back more than 49.9 million shares, according to the automaker. The Stuttgart-based maker of ...

Best Investment Newsletter

- 46% in 2008

- invest in the best performing US stocks only and sell them when the uptrend is over

- very easy to follow, simple buy/sell signals

- no need to have investing or trading experience

Find More Now!


Banks postpone US$12 billion Chrysler finance plan after market balks
> © 2006-2017 AutoNews24h.com except where otherwise noted