Daimler cuts more links with Chrysler
German automaker Daimler has stepped closer to completely extracting itself from its ill-fated investment in Chrysler, the company said Monday.
Daimler said it reached a deal with Chrysler, Chrysler's controlling shareholder, Cerberus Capital, and the U.S. government's Pension Benefit Guaranty Corporation "covering issues still pending between the parties."
Under the deal, Daimler will:
Forgive loans Chrysler owes it, and have its 19.9 per cent equity stake in Chrysler redeemed.Pay $200 million US a year into Chrysler’s pension plans for the next two years, but get out from under a $1-billion loan guarantee to the pension guaranty company.The pension guarantee will be reduced to $200 million, Daimler said.
It had already written off its Chrysler shareholding. As of end of of 2007, Chrysler owed Daimler $400 million.
The deal will cost Daimler $700 million, the company said.
Daimler sold 80.1 per cent of Chrysler to New York-based Cerberus in 2007, ending an unsuccessful nine-year joint business.
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