Republican Lawmaker Issa Challenges Chrysler’s Viper Statements
June 4 Chrysler LLC is under scrutiny by a Republican lawmaker over statements Chief Executive Officer Robert Nardelli made and documents filed in bankruptcy court about a lack of bidders for its Dodge Viper sports-car business.
“I am writing to express my serious concern that you failed to disclose information material to ongoing bankruptcy proceedings,” Darrell Issa, a California Republican who is the ranking minority member of the House Oversight and Government Reform Committee, said in a letter to Nardelli dated today.
A Michigan-based group of car enthusiasts and other private investors made a $35 million offer earlier this year and was negotiating terms before the company’s bankruptcy, said Dave Draper, one of the investors. Chrysler bankruptcy documents said the only interest in the operations was a $5.5 million offer it was investigating.
“We recently offered for sale our entire Conner Avenue plant, the facility that manufactures the Dodge Vipers, for only $10 million,” Nardelli said in a bankruptcy affidavit about the limited value of automotive assets. “We received no purchaser interest.”
The group offering $35 million had been willing to purchase the plant as part of its offer, said Joseph Moch Sr., an attorney representing the purchasing group.
Chrysler said in a statement that it evaluated strategic alternatives for the Viper business.
“Prior to the Chapter 11 filing, no offers meeting the company’s basic requirements for the sale of Viper assets were submitted,” David Elshoff, a Chrysler spokesman, said in a statement. “Post-petition, all parties who had an interest in purchasing the Viper assets were instructed by Judge Arthur Gonzalez to make a bid. Chrysler received just one post-petition bid of $5.5 million for Viper.”
The congressman asked Auburn Hills, Michigan-based Chrysler for all of its records relating to the discussions between Moch and the investors and Chrysler. Issa also asked for an explanation for the discrepancies between court testimony and statements from the potential buyers.
The chairman of the oversight committee, New York Democrat Edolphus Towns, has received Issa’s letter and is reviewing it, said Jenny Rosenberg, a spokeswoman for the panel. Issa can send the letter on behalf of the minority without the committee taking up the issue, she said.
U.S. Trustee Diana Adams, who represents the Justice Department in bankruptcies filed in Manhattan federal court, wasn’t immediately available for comment. A spokesman for her office declined to comment. U.S. Department of Justice spokeswoman Jane Limprecht declined to comment.
Waiting to Close
Chrysler has been trying to sell the Viper business since last August. Through May of this year, the automaker sold 289 of the sports cars with a V-10 engine and starting price of $88,125.
Chrysler carries over the Viper operations to the new company, with the option to leave some of its assets in bankruptcy court to be liquidated, according to court documents.
Chrysler is waiting to close on a $2 billion sale of most of its assets to a new company controlled by Fiat SpA for approval of a U.S. Appeals Court. The court is hearing arguments tomorrow from Indiana pension funds that the sale is an unconstitutional use of federal funds funneled through the Troubled Asset Relief Program.
Fiat also owns sports-car brands Maserati and Ferrari, which aren’t part of the Chrysler deal. Gualberto Ranieri, a Fiat spokesman, declined to comment.
‘We Made an Offer’
The pension funds also say that the $2 billion sale price undervalues what creditors might have fetched for the company through a liquidation sale. Nardelli’s court testimony was aimed at supporting the notion that its automotive assets had limited value in the current market.
“Yes we were interested. Yes we were negotiating. Yes we made an offer,” said Draper, who owned Cars & Concepts, a Brighton, Michigan-based company that installed convertible tops for Chrysler, General Motors Corp. and Ford Motor Co. in the 1980s. It was sold to Taylor, Michigan-based MascoTech Inc.
“They made a decision to include it in the assets to Fiat,” Draper said. “If we want to pursue it, we have to pursue it through Fiat.”
LINK:Republican Lawmaker Issa Challenges Chrysler?s Viper Statements - Bloomberg.com