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Cerberus Takes Over Majority Interest in Chrysler Group


 
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Code3TJ
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PostPosted: Mon May 14, 2007 10:17 am    Post subject: Cerberus Takes Over Majority Interest in Chrysler Group Reply with quote

Auburn Hills, Mich./Stuttgart, Germany, May 14, 2007 - The Board of Management of DaimlerChrysler AG has today decided, subject to the approval of the Supervisory Board and the relevant authorities, on the future concept for the Chrysler Group and the realignment of DaimlerChrysler AG. Completion of the transaction is subject to the satisfaction of customary closing conditions, including the receipt of regulatory approvals and Cerberus financing arrangements.

HIGHLIGHTS
    - An affiliate of private equity firm Cerberus Capital Management, L.P., New York, will make a capital contribution of $7.4 billion in return for an 80.1 percent equity interest in the future new company, Chrysler Holding LLC. DaimlerChrysler will hold a 19.9 percent equity interest in the new company. Chrysler Holding LLC will hold 100 percent each of the future Chrysler Corporation LLC, which produces and sells Chrysler, Dodge and Jeep vehicles, and the future Chrysler Financial Services LLC, which provides financial services for these vehicles in the NAFTA region
    - Of the total capital contribution of $7.4 billion, $5.0 billion will flow into the industrial business (Chrysler Corporation LLC) and $1.05 billion will flow into the financial services business in order to strengthen the equity base of both businesses. DaimlerChrysler will receive the balance of $ 1.35 billion. In addition, DaimlerChrysler will grant a loan of $0.4 billion to Chrysler Corporation LLC
    - According to the agreement, upon the closing of the transaction, DaimlerChrysler will transfer the industrial business of the Chrysler Group completely free of debt. Due to the Chrysler Group's anticipated negative cash flow until closing in connection with its restructuring plan, the transaction will give rise to a cash outflow
    - Of $1.6 billion for DaimlerChrysler. The overall net cash outflow resulting from the transaction will therefore be $0.65 billion. In addition, DaimlerChrysler will have to discharge long-term liabilities of the Chrysler Group in connection with the transaction. This will result in prepayment compensation of approximately $878 million, to be borne by DaimlerChrysler. The usual transaction costs will also be incurred
    - The Chrysler Group's financial obligations for pension and healthcare benefits towards its employees and the employees of the financial services business related to the Chrysler Group will be retained by the Chrysler companies. The pension plans are significantly over-funded at present


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Code3TJ
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PostPosted: Fri Jul 13, 2007 9:39 am    Post subject: Reply with quote

Cerberus Capital Management LP believes Chrysler Group has a promising future.

John Snow, the former U.S. secretary of treasury who is now chairman of Cerberus, said Wednesday during an appearance in Rochester that the New York-based private equity firm is committed to creating an environment for both management and employees in which the company can thrive.

"What you get to do is run the business. That's what (Chrysler Chief Executive) Tom LaSorda and his team want to do, and I think that's a plus for the employees."

Snow also said that despite rumors, Cerberus has no plans to sell the Jeep brand.

Cerberus Management and its team of experts already have vetted the turnaround plan put together by LaSorda and his leadership team and are confident it can and will work, he added.

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PostPosted: Fri Jul 13, 2007 8:26 pm    Post subject: Reply with quote

Any one know anything about cerebrus so we can get an idea of what this means for Jeep and the direction they will head?

Personally from a business standpoint I would say offroaders are in luck if the new management knows how to run a business... There are TONS of urban style POS SUVs so if Cerebrus wants success for the Jeep brand they ought to head back in the direction of increasing focus on ruggedness and offroad ability.... This will give them a niche which right now they're only competition (as far as stock vehicles go) is Land Rover now that the H1 is no more...
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PostPosted: Fri Jul 13, 2007 10:14 pm    Post subject: Reply with quote

For the most part, they don't seem to be the type of investors who come in and dismantle the company and the company officers seem to think pretty clearly. Here are some of the companies they own in addition to Bushmaster and Remington. http://www.cerberuscapital.com/port_comp_pro.html
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PostPosted: Sat Jul 14, 2007 11:51 am    Post subject: Reply with quote

Interesting... I know the 2007 wrangler seemed to be a step in the right direction but that was made before they got involved... I will beinterested to see what the next few years bring for Jeep...
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