U.S. News

DaimlerChrysler to Reduce Debt Sharply: Report

By Reuters

DaimlerChrysler will use the repayment of intercompany loans to reduce its debt sharply once the sale of its U.S. arm Chrysler closes, Chief Financial Officer Bodo Uebber told a newspaper.

The group will also stop issuing bonds and commercial paper in the quarters ahead, he told Germany's Boersen-Zeitung in an interview published on Friday.

U.S. private equity firm Cerberus Capital Management is buying a majority stake in Chrysler and will repay the intercompany loans -- which stood at $36 billion at the start of 2007 -- when the deal closes, he said.

"Based on the favorable maturity structure for bonds, bank loans and commercial paper, Daimler will reduce the debt that is no longer needed to around 10 billion euros by September 2007," he was quoted as saying.

"In addition, bonds that mature in the fourth quarter of 2007 and the first quarter of 2008 will not be replaced. Then Daimler will have no more excess debt on its books by the second quarter of 2008."

Asked what this meant for debt issues, he said: "We will not issue bonds or commercial paper in the quarters ahead."

The company plans to change its name to Daimler once the Chrysler sale goes through. It expects to close the deal in the third quarter of this year.