Tuesday, December 02, 2008
Daimler and Cerberus start $7bn row
Daimler and Cerberus appear to be headed for a protracted legal dispute after the private equity firm launched an audacious bid demanding more than $7bn from the carmaker over losses that followed its 2007 acquisition. Cerberus has accused the German carmaker of knowingly selling a damaged asset last year. The private equity firm insists that Daimler breached the terms of a $7.2 billion deal to sell 80.1 percent of the business in August 2007. In a statement the equity firm said that Daimler had made "extraordinary changes" to its underwriting standards for vehicle leases and financing between February and August 2007 when the deal to sell Chrysler closed. Cerberus said those changes would have boosted sales of Chrysler, Jeep and Dodge vehicles but at the cost of shifting risk to the balance sheet of Chrysler and its financing arm. It added that Daimler had "intentionally and materially breached its obligations" under the Chrysler deal in other ways but did not elaborate further. Cerberus is said to be interested in buying the remaining share of Chrysler from Daimler. It is currently seeking $7bn in emergency federal aid for Chrysler and must submit plans to the US Congress on how it will restructure the business to make it more viable. DATED: 02.12.08 FEED: MT |