Find Reviews by Make:
The latest skirmish is ostensibly over the price tag to be placed on Daimler’s remaining ownership share of Chrysler, but what we are really seeing are early salvos in the “you ripped us off” lawsuit Cerberus is destined to file against Daimler. Daimler put out a terse press release this morning saying: “The negotiations between Daimler AG and Cerberus Capital Management LLC on the redemption of Daimler’s 19.9% shareholding in Chrysler Holding LLC (“Chrysler”) and other issues related to Cerberus’s investment in Chrysler have been made considerably more difficult during the last weeks due to exaggerated demands by Cerberus. These demands by Cerberus exceed the value of Cerberus’ investment in Chrysler. For the acquisition of an 80.1% stake in Chrysler, Cerberus had invested USD 7.2 bn. The claims made now go beyond the framework of the contractually agreed possible obligations under representations and warranties. The new claims also include an allegation of conduct outside the ordinary course of business by Daimler during the time between signing and closing of the transaction as well as the allegation of incomplete information about the business. Daimler rejects these absurd allegations and the claims derived there from as being completely without substance.”Reading between the lines, it sounds like not only is Cerberus is demanding that Daimler’s remaining ownership interest be handed over gratis, but also for Daimler to pony up cash in excess of Cerberus’ original investment. “Representations and warranties” is the section of a contract wherein each side declares that it is telling the truth, the whole truth and nothing but the truth … sort of. That “possible obligations” phrase refers to limitations of compensation to be paid in the event something not truthful or complete later comes to light. The “allegation of conduct … between signing and closing” zinger means that Cerberus is accusing Daimler of stealing significant assets from Chrysler during the period of time between the contract signing and the actual turn over. Kind of like ripping out the kitchen sink after selling your house, but before turning over the keys. Zoinks! Cerberus is angling for a way around the limitations of the reps and warranties section. Nearly a year ago, Justin foretold a Cerberus lawsuit against Daimler, and he is looking very smart right now.
You have to feel just a little sorry for Daimler. The Germans paid $300 million in 2003 to settle a lawsuit by Kerkorian & Friends which alleged that Daimler used fraud to underpay for Chrysler back in 1998. After losing most of its investment in Chrysler, Daimler is once again facing the legal dogs of war over how it gave the company away. The US may be losing its grip on running car companies, but we sure know how to keep the lawyers busy.
17 Comments on “Daimler and Cerberus Prepare For Battle...”
Read all comments
It’s better to see businesses ripping off each other than ripping off the tax payer.
I remember Justin’s article from before. He is indeed looking very smart right now. Go Justin!
So Cerberus is essentially saying that they weren’t very good at looking into what they were buying, and so it’s Daimler’s fault?
Daimler had already starved Chrysler for development money, neglected the factories, and destroyed what little quality Chrysler had in the cars. This was a shock to who, exactly?
Cerberus is looking for any way they can get to run away from this monster before it collapses under its own dead weight. Expecting Daimler to pay for it is simply insane.
Those poor widdle lambs at Cerberus, Taken For A Ride (couldn’t resist!) by the nasty Germans.
The Bobs, Eaton and Lutz, look smarter every day.
Hey, do business with the Wall St pigs and you will end splattered with sh*t.
double post
Hey, Niedermeyer, why are comments closed on some stuff?
1996MEdition: I think it was mentioned yesterday, that it’s all a big mistake, apparently since Robert is gone on vacation, the site is acting up. I don’t know if you should use the contact form to bring it to their attention, or if they could put an email address up for reporting stuff such as this. It happened a few times yesterday, and they re-opened the comments there.
Here’s a simple solution for them:
Since Daimler already considers the value of their share in Chrysler to be worthless, just give it to Cerberus for free. In exchange, Cerberus cuts the crap and goes away for good.
An original story of Cerberus’s venture into Chrylser’s business (August 2007) was to get in hold of the financial part of the business. In combination Chrysler financial and its stake on GMAC, which the company purchased on November 2006, Cerberus thought that they had a good deal and was speculated that Cerberus was to unload Chrysler’s manufacturing part at some time in the future. It seems that, not only these investments were bad but inevitably will kill Cerberus. Cerberus may not able to hold itself let alone hold onto Chrysler or GMAC. Diamler’s value of Chrysler’s state is now valued at zero as of November 2008. [1][2] However, Cerberus may not able to unload any of these units to any other market players.
[So far the remarks from the likes of “Hippo” proves that people just say things and many of them are know-nothings, very common.]
[1]
http://www.google.com/hostednews/ap/article/ALeqM5hUxJ9PPvkNwvGEWWxUHE2Rw5DyuAD94MP9T01
[2]
http://blogs.reuters.com/reuters-dealzone/2008/10/23/20-percent-zero/
Is really hard to comment at this moment, what might end up is Dumbler may have to hand over the 19.9% to the three headed mad dog. The Mad dog can go on & on for a protracted law suit, but will there be any more meat in the end.
The Economy when the purchase was made wasn’t bad at all.
Not so sure any lawyers will want to represent Cryslur when knowing very well her own Plaintiff is very much down & out. Just not going to find an Elephant in a little match box.
How much can they expect to milk out of Dumbler?
[So far the remarks from the likes of “Hippo” proves that people just say things and many of them are know-nothings, very common.]
So Russell,
How are you and your buddies on Wall Street doing?
Ronnie Schreiber
Motorobilia
I don’t much care for Cerebus but, after the destruction of Chrysler wrought by Daimler,I hope they rape em good!!!!!!!
So after suing each and every of Chrysler’s suppliers, Cerberus is now preparing to sue Daimer? Jeez…how low can you go?
Daimler should just put its 20% stake in Chrysler on ebay, get the fcuk out of there and not look back.
It seems that, not only these investments were bad but inevitably will kill Cerberus.
I wish. I think we have no idea what a huge financial pig Cerberus is. I repeatedly see the Cerberus name in all kinds of deals all over the world. There seems to be a pattern that they get some deal in their sights and bring partners on board to fund some part of it; a little or most, who knows. Cerberus ‘manages’ the thing and gets fees for that. In the case of the Mervyns bankruptcy, Cerberus apparently got out with profit before the collapse. I wonder how often their partners get screwed as opposed to the suckers they unload stuff on.
Remember one of the reasons why GM wanted Chrysler was that Chrysler had cash. I seem to remember this cash was part of what Cerberus was supposed to put into the game (Daimler is still a partner). Did Daimler expect these billions to be put into product? I adds up to me that Cerberus has put damn little into the Chrysler pot so far.
Meanwhile, Cerberus/Chrysler is suing Getrag about the plant in Kokomo, IN claiming some problem with the way Getrag got their financing. Smells like Chrysler decided to abort the thing and is suing before being sued.
Why aren’t more people raising hell about Cerberus/Chrysler/Daimler getting bailout money?
Let the record reflect that John Horner is the author of this post. Apologies John!
As for the comment system strangeness, I can only beg for patience. I’m assured that it’s being worked on.
So will Cerberus refund money to Chrysler owners that feel ripped off?
Are they guy’s at Cerberus that stupid? Nobody investigated why Daimler was so desperate to unload Chrysler in a hurry?
I don’t feel one bit sorry for them, they didn’t do their homework before they took this turkey. From what I remember Daimler just about paid Cerberus to take Chrysler off it’s hands anyway.
“Since Daimler already considers the value of their share in Chrysler to be worthless, just give it to Cerberus for free.”
Ah, but Cerberus appears to want more than that. They want Daimler to put more cash on the barrel AND give up the remaining shareholdings. “We waz wobbed” they say.
Wasp landing on thistle.
Someone’s going to get stung, and it’s going to be fun to watch.