CHRYSLER &lt;C> AMC BUYOUT VALUED AT 1.55 BILLION

  Chrysler Corp's proposed acquisition of
  American Motors Corp is valued at about 1.55 billion dlrs,
  including the cost of acquisition and the 767 mln dlrs in
  American Motor' debt that Chrysler will assume, analysts said.
      They said Chrysler's cost of acquisition was valued at  782
  mln dlrs, paid in cash, notes and Chrysler shares.
      The analysts told Reuters that at a New York briefing
  Chrysler treasurer Fred Zuckerman outlined his company's
  agreement with Renault to assume AMC's debt as well as 332 mln
  dlrs in unfunded pension liabilities, though the latter is not
  included valuing the transaction.
      Analysts were generally positive on Chrysler's proposed
  purchase of its much-smaller rival, but said they expected the
  transaction would carry with it a short-term dilution in
  Chrysler's earnings.
      A Chrysler financial source, speaking anonymously, told
  Reuters that the proposed purchase price was smaller than it
  would have been had a deal been struck last year because the
  impact of the new U.S. tax law removes Chrysler's ability to
  assume AMC's large reserve of tax-loss carryforwards
  accumulated from its losses since 1980.
      "There were very serious discussions last fall but we
  didn't pull it off," the source said in a reference to the
  assassination in November of former Renault chairman Georges
  Besse.
      "It's too bad because the tax benefits fell on the floor.
  And Renault could have gotten a much better price if we'd done
  it before the end of last year."
      In addition to AMC's debt and its pension liabilities, the
  source said Chrysler would also assume any liability from
  lawsuits over the safety of Jeeps, which he called "an overhang
  to the company."
      Analysts quoted Chrysler officials as having told them that
  the deal includes payment to Renault of 200 mln dlrs principal
  in the form of a 10-year note at eight pct interest, 35 mln
  dlrs cash for Renault's equity in AMC's finance subsidiary, 25
  mln dlrs in cash for "transaction fees" in connection with the
  acquisition and 522 mln dlrs worth of Chrysler stock to be paid
  AMC shareholders.
      "The big number is the 767 mln dlrs in debt assumption,"
  analyst Jack Kirnan of Kidder Peabody and Co told Reuters.
       Moody's Investors Service Inc said it may downgrade 12
  billion dlrs of Chrysler Corp and unit debt due to the deal.
       But the Chrysler source said that in assuming AMC's
  liabilities, his company will refinance at a lower rate any AMC
  debt that is being carried at "non-market" rates.
      He said there were difficulties in negotiating with the
  previous Renault management on the acquisition because they
  were committed to the group's business plan of which AMC was an
  integral part.
      "The new management didn't have that problem - AMC wasn't
  their baby," he said.
  

