Wednesday, November 26, 2008
Chrysler News-Daimler struggles to shed Chrysler
Tom Krisher / Associated Press
DETROIT -- Daimler AG says talks to sell its remaining stake in struggling automaker Chrysler Holding LLC have stalled because of exaggerated demands from Chrysler owner Cerberus Capital Management LP.
Daimler says Cerberus is making demands that exceed the value of the private equity firm's investment in Chrysler. It also says Cerberus is claiming Daimler provided incomplete information about Chrysler.
Daimler sold 80.1 percent of Chrysler to Cerberus last year in a $7.4 billion deal. Cerberus is trying to buy the remaining 19.9 percent stake and is in talks to sell Chrysler.
A message left for a Cerberus spokesman wasn't immediately returned.
Stuttgart, Germany-based Daimler said in a statement Wednesday that Cerberus has alleged "conduct outside the ordinary course of business by Daimler during the time between signing and closing of the transaction, as well as an allegation of incomplete information about the business."
Cerberus and Daimler signed the deal May 14, 2007, and the sale closed Aug. 6, 2007.
Daimler spokesman Han Tjan declined to give details of the allegations but said they are untrue.
"We reject these allegations as being completely without substance," Tjan said in a telephone interview.
Cerberus, a New York private equity firm, is making financial claims that go "beyond the framework of the contractually agreed possible obligations under representations and warranties," Daimler's statement said.
Since Cerberus acquired Chrysler, U.S. auto sales have dropped substantially. Chrysler sales fell 35 percent in October from a year earlier and are down 26 percent for the first 10 months of this year.
Cerberus has recorded substantial losses since it purchased the majority stake in Chrysler: $1.6 billion last year and $1.28 billion in the first half of this year.
Since Chrysler is privately owned, the company does not have to report its earnings, but they can be calculated from Daimler's balance sheet.
Auburn Hills-based Chrysler, along with other U.S. automakers, is seeking federal loans to stave off running out of cash. Cash-starved General Motors Corp. reportedly had been in talks last month to buy Chrysler.