*

CVC guarantees Deutsche Bahn or government at least €1

billion

in potential IPO exit

*

CVC's bids supported by GIC, ADIA, and QIA

*

Letter demands equal assessment of all bids

(Adds details of CVC consortium in paragraph 6, context and

background throughout)

By Emma-Victoria Farr and Markus Wacket

FRANKFURT/BERLIN, Sept 9 (Reuters) - CVC is

improving its offer for Deutsche Bahn's logistics business

Schenker, with the private equity firm asking for a fair

assessment of its bid by the German railway's board and

supervisory board in a letter seen by Reuters on Monday.

The letter said CVC is guaranteeing Deutsche Bahn at least

one billion euros in the event of a potential future IPO exit,

if the German government decides to remain an investor.

Deutsche Bahn wants to sell Schenker in order to concentrate

on the German railway's crisis-ridden core business and reduce

its debt burden of more than 30 billion euros ($33.14 billion).

Last month, CVC presented two bids, one for 100% of Schenker

that would value it around 14 billion euros, and another with an

option that could see Germany reinvest with a minority stake,

increasing its offer up to 16 billion euros.

CVC's offers for Schenker were "neither presented in detail

nor discussed" during a special steering committee meeting

regarding the sale on Sept. 6, the letter said.

The investment group's bids are supported by a consortium of

Singapore sovereign wealth fund GIC, Abu Dhabi Investment

Authority (ADIA) and Qatar Investment Authority (QIA) which will

act as equity providers in the transaction, the letter said.

"The most important criterion remains that a sale must be

economically advantageous for the railway," a spokesperson for

Deutsche Bahn said.

"A decision on the sale of DB Schenker will be submitted to

the supervisory board of Deutsche Bahn for final approval at the

end of the process. It also requires the approval of the federal

government," they added.

CVC, which declined to comment, is competing against a rival

offer for Schenker from Danish freight forwarder DSV,

which was slightly ahead in the bidding race, sources told

Reuters last week.

DSV's offer for all of Schenker also values the company at

around 14 billion euros.

German labour union Verdi in a positioning paper last month

warned against selling Schenker to DSV, fearing potential job

losses resulting from the proposed combination.

Schenker employs almost 15,000 people in Germany and more

than 70,000 worldwide.

A steering committee made up of state secretaries from the

German government coalition discussed the sale last week. The

responsible government ministers are considered to be crucial to

the sale of Schenker by the state-owned railway company.

"In the increasingly challenging economic and geopolitical

situation, Germany cannot afford to lose another domestic and

strategically important industrial champion," CVC's letter said.

($1 = 0.9051 euros)