April 17, 2019 / 10:12 AM / 2 days ago

Deutsche Bahn favors sale of Arriva to cut debt, document shows

FILE PHOTO: A locomotive engine of German railway Deutsche Bahn is seen at the main train station in Frankfurt, Germany, March 27, 2019. REUTERS/Kai Pfaffenbach/File Photo

BERLIN (Reuters) - Germany’s massively indebted railway operator Deutsche Bahn is favoring a partial or complete sale of its British-based subsidiary Arriva to reduce debt, a document seen by Reuters on Wednesday showed.

The document, a draft resolution of Deutsche Bahn’s supervisory board, said both a partial and a complete sale were options, but added that management saw significant disadvantages if only a minority stake in Arriva will be put up for sale.

Net debt of more than 1 billion euros ($1.13 billion) would remain an item on the state-owned operator’s balance sheet, and economic opportunities linked to a deal would be “significantly lower” if the company only sells or floats a minority stake, the document said.

Deutsche Bahn declined to comment.

The document also said that in order to finance growing investment needs at Deutsche Bahn’s logistics unit DB Schenker, the company only sees selling a minority stake as a feasible option, as Schenker was of strategic importance.

Reporting by Markus Wacket; Writing Tassilo Hummel; Editing by Tom Sims

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