Chrysler Bankruptcy Would Cost Daimler Over $1 Billion


Although Daimler only owns 19.9 percent of Chrysler, a Chrysler bankruptcy would cost Daimler over $1 billion.

Daimler executives recently explained the full extent of Daimler’s liabilities should Chrysler fail at the annual shareholders meeting. The liabilities include a possible $1 billion bill for unfunded pension liabilities attached to Chrysler as well as various other potential claims from suppliers. Daimler CFO, Bodo Uebber, explained that it’s premature to speculate about the impact Chrysler’s unstable finances might have on Daimler. “We can’t say what impact Chrysler will have on us this year,” he added.

Daimler CEO Dieter Zetsche also commented on the company’s financial situation relating to Chrysler, saying that the Daimler has essentially valued all Chrysler related assets at zero. “Both the equity value and the two loans we granted to Chrysler in connection with the separation are valued at zero on our balance sheets,” said Zetsche. This means that Daimler dropped its previous valuation of Chrysler related assets by more than $4 billion.

The last minute loan Daimler issued Chrysler in 2007 has also been written down. Daimler realizes the $1.5 billion loan might not be paid back, but Uebber said Daimler has not waived its rights to make a claim for the money it is owed.

Currently, Daimler is trying to negotiate with Cerberus Capital Management L.P- Chrysler’s current owners- to sell Daimler’s remaining 19.9 percent stake in Chrysler. The negotiations, however, have gone nowhere. Cerberus’ demands to buy the remaining Chrysler share are deemed unacceptable by Zetsche and the executives at Daimler.

Source: The Detroit Bureau

New Car Research

our instagram

get Automobile Magazine

Subscribe to the magazine and save up to 84% off the newsstand price


new cars

Read Related Articles