German taxpayers to inject billions to save Deutsche Bahn

[BERLIN] German Finance Minister Wolfgang Schaeuble has agreed a 1 billion euro (S$1.5 billion) cash injection for indebted rail operator Deutsche Bahn and additional investment in its network, the transport ministry said on Wednesday.

The government will inject the 1 billion euros this year or next to shore up Bahn's capital. Over the coming four years, the state could invest another 1.4 billion euros in the network, the spokesman said.

Deutsche Bahn has almost 20 billion euros of debt.

In July, credit rating agency Standard & Poor's cut the group by one notch to "AA-" from "AA", citing weak operating performance and uncertainty over the timing and proceeds of a partial privatisation of units Arriva and Schenker.

The capital injection is aimed at avoiding further downgrades that would raise Bahn's interest payments.

Under the agreement with Schaeuble, state-controlled Bahn will reduce its dividend payments to the government, which in recent years flowed back to the group in the form of investments in its rail network, and Berlin will cover the shortfall.

This will amount to a further 1.4 billion euros in government investments over four years.

REUTERS