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Daimler-Benz Australia On S&P Watch Negative

7 May 1998

Daimler-Benz Australia On S&P Watch Negative

    MELBOURNE, Australia, May 7 -- Standard & Poor's today placed
its single-'A'/'A-1' ratings of Daimler-Benz (Australia) Pty. Ltd. (DBA) on
CreditWatch with negative implications following the announcement that DBA's
parent company, Daimler-Benz AG (Daimler-Benz) and Chrysler Corp. are
discussing a possible merger of the two companies into a new entity.
    Daimler-Benz's single-'A'-plus corporate credit and senior unsecured
ratings have been placed on CreditWatch with negative implications.  At the
same time, Standard & Poor's placed its single-'A' corporate credit and senior
unsecured ratings of Chrysler Corp. on CreditWatch with positive implications.
The 'A-1' short-term ratings of both Daimler-Benz and Chrysler are affirmed.
The ratings will ultimately be equalized should the merger be successful.
Although 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.  The ratings on DBA are
unlikely to fall below single-'A'-minus/'A-2'; however, ratings are dependent
on the outcome of the merger discussions, and any consequent rating changes on
Daimler-Benz.
    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, Standard &
Poor's said. -- CreditWire

SOURCE  Standard & Poor's CreditWire