Cerberus secures $62B refinancing for Chrysler

Cerberus Capital Management on Friday said seven major North American banks and investment banks have agreed to raise the $62 billion needed to refinance the debt and recapitalize Chrysler Group.
The New York-based private equity firm announced on Monday it would acquire the U.S. automaker from Germany's DaimlerChrysler AG for $7.4 billion. But Cerberus revealed little else about how it would finance the takeover.

The mix of financing will include securities backed by the Chrysler's automobile assets, high-yield corporate debt, and bank loans, said Cerberus spokesman Peter Duda. Leading the financing is JPMorgan Chase & Co., Goldman Sachs Group Inc., Citigroup Inc., Morgan Stanley, Bear Stearns Cos., Toronto-Dominion Bank and the Royal Bank of Canada.

Some $50 billion of proceeds will be used to refinance debt at Chrysler's financing unit. The amount will be the largest refinanced by a private equity firm, according to financial data tracker Dealogic.

DaimlerChrysler Chief Financial Officer Bodo Uebber said during a conference call on Monday that the new Chrysler would likely carry a "BB" junk rating after it splits from DaimlerChrysler, which has a "BBB" investment-grade rating. The lower rating would equate to higher borrowing costs. More at Detroit News