Daimler & Chrysler's Long-Term Ratings on S&PWatch Negative/Positive

6 May 1998

    LONDON, May 6 -- Standard & Poor's today placed its
single-'A'-plus corporate credit and senior unsecured ratings of Daimler-Benz
AG and related entities on CreditWatch with negative implications.  At the
same time, Standard & Poor's places its single-'A' corporate credit and senior
unsecured ratings of Chrysler Corp. and related entities on CreditWatch with
positive implications.
    The 'A-1' commercial paper ratings of Daimler-Benz and Chrysler units are
affirmed.
    The actions follow today's confirmation of discussions about a possible
merger of the two companies into a new entity.  Current negotiations are based
on a stock transaction, in which the stockholders of both companies would
become stockholders of a new entity.
    Ratings will ultimately be equalized should the merger be successful.
Although such a transaction would bring together two major automotive players,
questions regarding the expected operating benefits, the future strategy of
the new organization, and the resultant financial policies of the merged
companies remain currently unanswered.  However, significant changes to
existing financial philosophies are not expected.
    Standard & Poor's will closely monitor the developments of the current
discussions and resolve the CreditWatch once the major business and financial
aspects of the merger are defined and discussed with management.
    It is further assumed that Daimler will continue to move ahead with its
previously announced tax-driven special dividend pay-out of retained earnings,
with a full pay back by a subsequent capital increase within a reasonable
time-frame, Standard & Poor's said. -- CreditWire

SOURCE  Standard & Poor's CreditWire