UPDATE 2-Daimler reaches deal to offload Chrysler

* To offload Daimler 19.9 pct stake in Chrysler
* Forgives repayment of $1.5 bln loan to Chrysler

DETROIT, April 27 (Reuters) - Daimler AG on
Monday reached an agreement with Chrysler, the U.S. automaker's
owner Cerberus Capital Management, and the U.S. Pension Benefit
Guaranty Corp to exit its 19.9 percent stake in the company.
Daimler had sold an 80.1 percent stake in the U.S.
automaker to private equity firm Cerberus [CBS.UL] in 2007,
ending a stormy decade long relationship with the struggling
U.S. carmaker that is operating under U.S. government aid.
Daimler said the remaining stake in Chrysler would be
redeemed and it would forgive the repayment of loans it had
extended to Chrysler that it already has written off in its
2008 financial statements.
The German automaker had loaned Chrysler $1.5 billion in
2008 that is a second-lien secured loan, junior to a nearly
$6.9 billion of loans now under negotiations between the U.S.
Treasury and other Chrysler creditors.
Daimler said it agreed to pay $200 million to Chrysler's
pension plans on the date of the execution of the deal and in
each of the next two years.
That will reduce an existing pension guarantee of $1
billion to $200 million and that will remain in place to August
2012, Daimler said.
The deal comes a day after the United Auto Workers union
agreed to a concessionary deal to cut Chrysler's obligations to
a retiree health care fund.
With Daimler getting out of Chrysler, negotiations with
Chrysler first lien lenders remains the chief remaining
obstacle for the automaker to meet the month-end deadline that
the U.S. government has mandated in response to Chrysler's
request for additional loans.
President Barack Obama's auto task force has told Chrysler
it has until May 1 to reach agreements for an alliance with
Italy's Fiat SpA , a reduction in secured debt and
resolution of labor issues with its unions.
Daimler's exit paves the way for Fiat to strike a planned
deal with Chrysler.
Cerberus and Chrysler has been in negotiations with Daimler
to try to buy the remaining stake back from the German
automaker since late 2007.
(Reporting by Poornima Gupta and David Bailey; Editing Bernard
Orr, Richard Chang)
((david.bailey@thomsonreuters.com; +1 313 967 1910; Reuters
Messaging: david.bailey.reuters.com@reuters.net))
Keywords: DAIMLER/CHRYSLER

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