Daimler Agrees to Cease Stake in Chrysler

Daimler AG today announced that it has decided to unload its stake in Chrysler and erase all debts, "which were already written off in the 2008 financial statements". Furthermore, the German company agreed to direct $200 million to Chrysler's pension service in order to "secure payments to former employees of DaimlerChrysler".

"Chrysler and Cerberus waive any claims that might arise from representations and warranties made in the transaction of August 3, 2007, including the accusations made against Daimler in 2008 that Daimler allegedly improperly managed certain issues in the period between the signing of the agreement and the conclusion of the transaction. This also applies to the accusation that incomplete information was provided on the transaction," Daimler said in a release.

Basically, the agreement not only keeps Daimler out of the Chrysler versus Chapter 11 conflict but also allows the American automaker to continue negotiations with Fiat regarding the proposed strategic alliance.

Daimler and Chrysler started their partnership in 1998 when the German group took over the American automaker while nine years later, it ceased 80 percent of the company to Cerberus. Chrysler is currently facing a 30-day deadline to revise the survival plan it submitted to the government and reach an agreement with Fiat by the end of April. As part of the agreement, Fiat will get a stake of up to 35 percent in Chrysler and use the company's domestic dealership network to expand its coverage in the United States.

"Following the transfer of the term sheet into the final definitive agreements, the relationship between Daimler and Chrysler will solely consist of supplier-customer relations, including limited support for certain dealer financing until the end of September 2009, as well as certain guaranties," Daimler explained in the statement.
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About the author: Bogdan Popa
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Bogdan keeps an eye on how technology is taking over the car world. His long-term goals are buying an 18-wheeler because he needs more space for his kid’s toys, and convincing Google and Apple that Android Auto and CarPlay deserve at least as much attention as their phones.
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