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Chrysler Group Sold

2307 Views 0 Replies 1 Participant Last post by  rickaren
May 14, 2007

Cerberus takes over majority interest in Chrysler Group and related
financial services business for EUR5.5 billion ($7.4 billion) from

- Affiliate of Cerberus to acquire 80.1% equity interest in new company
Chrysler Holding LLC; DaimlerChrysler AG to retain 19.9%
- Obligations for pensions and healthcare costs to be retained by
Chrysler companies
- Transaction expected to result in net cash outflow of EUR0.5 billion
for DaimlerChrysler
- DaimlerChrysler’s net profit according to IFRS in 2007 to be reduced in
a range of EUR3-4 billion
- Equity ratio of DaimlerChrysler’s industrial business is expected to be
over 40% by the beginning of 2008
- Extraordinary Shareholders’ Meeting to decide on change of name to
Daimler AG
- DaimlerChrysler CEO Dieter Zetsche on the realignment of
DaimlerChrysler AG: “We will be the leading manufacturer of premium
vehicles and a provider of premium services in every market segment we
serve worldwide.”
- UAW President Ron Gettelfinger: “The transaction with Cerberus is in
the best interests of our UAW members, the Chrysler Group and Daimler.”
- Cerberus Capital Management Chairman John Snow: “Cerberus believes in
the inherent strength of U.S. manufacturing and of the U.S. auto industry.
Most importantly, we believe in Chrysler.”

Stuttgart - The Board of Management of DaimlerChrysler AG (stock-exchange
abbreviation DCX) has today decided, subject to the approval of the
Supervisory Board, 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.

Details will be explained at a press conference in Stuttgart today at 2

Structure of the transaction
- An affiliate of private equity firm Cerberus Capital Management, L.P.,
New York, will make a capital contribution of EUR5.5 billion ($7.4 billion)
in return for an 80.1% equity interest in the future new company, Chrysler
Holding LLC. DaimlerChrysler will hold a 19.9% equity interest in the new
company. Chrysler Holding LLC will hold 100% 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 EUR5.5 billion, EUR3.7 billion
will flow into the industrial business (Chrysler Corporation LLC) and
EUR0.8 billion will flow into the financial services business in order to
strengthen the equity base of both businesses. DaimlerChrysler will receive
the balance of EUR1.0 billion. In addition, DaimlerChrysler will grant a
loan of EUR0.3 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 EUR1.2 billion for DaimlerChrysler. The overall net cash outflow
resulting from the transaction will therefore be EUR0.5 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 EUR650 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.

Effects on key figures
The transaction will have the following effects on DaimlerChrysler AG:
- In total, current estimates indicate that net profit according to IFRS
in 2007 will be reduced by EUR3-4 billion.
- Due to the deconsolidation of the Chrysler companies and the resulting
reduction in the balance-sheet total, the equity ratio of DaimlerChrysler’s
industrial business is expected to increase to more than 40% by the
beginning of 2008.
- There will be no changes relating to the bonds issued and guaranteed by
DaimlerChrysler AG. In the financial services business for the Chrysler,
Jeep ® and Dodge brands, Cerberus will take over the financing previously
provided by DaimlerChrysler AG.
- The 19.9% equity interest held by DaimlerChrysler AG in the new company
Chrysler Holding LLC will be included after closing at equity in the Van,
Bus, Others segment.
- The closing of the transaction is expected to take place in the third
quarter of 2007.

This is an abbreviated version. You will find the complete IR Release and
more financial documents on our web site
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