Daimler is to divest its 19.9% stake in Chrysler.
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Daimler, Chrysler, its majority owner Cerberus Capital Management and the US Pension Benefit Guarantee Corporation (PBGC) yesterday signed a binding term sheet covering issues still pending between the parties in connection with Chrysler, Daimler said in a statement.
“Under this agreement, Daimler’s remaining 19.9% shareholding in Chrysler will be redeemed and Daimler will forgive repayment of the loans extended to Chrysler, which were already written off in the 2008 financial statements,” the automaker said.
Daimler said it had agreed to pay US$200m into Chrysler’s pension plans initially and in each of the next two years.
“In this way, Daimler is helping to secure pension payments to former employees of DaimlerChrysler. The existing pension guarantee of $1bn vis-à-vis the PBGC will be reduced to an amount of US$200m and will remain in place until August 2012.”
Daimler said the future relationship between itself and Chrysler would be that of supplier-customer, including limited support for some dealer financing until the end of September 2009.
The effect on EBIT resulting from this agreement, which will be booked in the second quarter of 2009, is estimated at up to $700m.
