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Chrysler readies $20 billion loan for Cerberus buyout

From Reuters| June 26,2007

NEW YORK (Reuters) -- J.P. Morgan is launching a $20 billion senior secured bank loan this week to back Chrysler Holdings' buyout by Cerberus Capital Management, banking sources told Reuters Loan Pricing Corporation.

The deal is split between bank loans for Chrysler Financial Services and Chrysler Corp.

The loan for Chrysler Financial Services consists of a $2 billion revolver, a $4 billion term loan B and a $2 billion second-lien term loan.

The financing for Chrysler Corp. consists of a $10 billion term loan B and a $2 billion second-lien term loan.

Bear Stearns, Goldman Sachs, Citigroup and Morgan Stanley are also involved in the financing.

Earlier, published reports said the finance unit would raise $45 billion through high yield debt and asset-backed securities, while the auto operations unit would issue $12 billion in debt.

The deal comes roughly after two weeks of softness in the institutional loan market and likely will provide a test for the credit markets because of the large amount of financing being raised and concerns, in general, about the automotive sector.

DaimlerChrysler said in a conference call last month that Chrysler Holdings may get a "BB" credit rating, which is higher than Ford Motor Co. and General Motors Corp.'s "B" rating profile. DaimlerChrysler has a "BBB" investment grade rating.

DaimlerChrysler last month sold an 80.1 percent equity stake in Chrysler Holding to Cerberus, which will invest $7.4 billion in the automaker and its finance division.

DaimlerChrysler will retain a 19.9 percent stake in the new company.

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