Stuttgart, Germany — DaimlerChrysler recently completed the closing for the transfer of a majority interest in the Chrysler Group and for the related financial services business in NAFTA to a subsidiary of Cerberus Capital Management, L.P., a private- equity company based in New York. A subsidiary of Cerberus takes over 80.1 percent in the Chrysler Holding LLC, while DaimlerChrysler retains a 19.9 percent interest, as announced in May 2007.
Basically, the conditions of the transaction and the economic effects have not changed since the agreement was signed on May 14, 2007. Furthermore, DaimlerChrysler and Cerberus have agreed to support the financing of the majority takeover of Chrysler by Cerberus in light of highly volatile US loan markets. Both companies will subscribe $2 billion of second lien debt for Chrysler's automotive business, to be drawn within 12 months. DaimlerChrysler's portion will be $1.5 billion. The debt will be priced at market conditions. One year after the closing, DaimlerChrysler has the right to sell this loan in the credit market. The maturity of this loan is seven years.
DaimlerChrysler's financing support is a strong sign of its overall determination to make sure that, under the majority of Cerberus, Chrysler has a good start as a successful stand-alone car company.
As of today, the Board of Management of DaimlerChrysler AG is reduced to six members: Tom LaSorda, Eric Ridenour and Tom Sidlik are no longer members. Within the Board of Management, Bodo Uebber additionally assumes responsibility for procurement.
Due to the new corporate structure, DaimlerChrysler AG is to be renamed as Daimler AG. The shareholders are to decide on this change at an Extraordinary Shareholders' Meeting in Berlin on October 4, 2007.