Daimler & Chrysler's Long-Term Ratings on S&PWatch Negative/Positive
6 May 1998
Daimler & Chrysler's Long-Term Ratings on S&PWatch Negative/PositiveLONDON, 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