Daimler has already admitted that its 19.9% share in Chrysler is worth absolutely zero as far as its corporate balance sheets are concerned, but that's not stopping Cerberus from going after that remaining bit as it tries to become the sole owner of the beleaguered American automaker. Without full control of Chrysler, Cerberus would have a tough time offloading it in either one lump deal or in smaller, bit-by-bit transactions. But it sounds like Chrysler's majority owner isn't making life easy for Daimler, accusing the German entity of providing incomplete information about Chrysler and prolonging the actual sale that took place late in 2007. As you'd expect, Daimler is denying these accusations completely and is claiming that Cerberus is making outlandish demands to take the rest of the company off its German hands.

Accusations beget accusations, so it's not terribly shocking that Cerberus has issued a press release countering Daimlers to explain its side of the story. From what we can discern from these early punches is that Cerberus has taken issue with Chrysler's past lease and financing practices while under Daimler's control. You can read the dueling press releases from Daimler and Cerberus after the break.

Despite the German and American origins of the dispute, the whole thing's playing out like a proper Telemundo telenovela. We await the obligatory kiss-and-make-up scene at the end.

[Source: Detroit News]

PRESS RELEASE:

Negotiations on Redemption of Chrysler Shares More Difficult

STUTTGART, Germany, Nov. 26 /PRNewswire-FirstCall/ -- The negotiations between Daimler AG (stock exchange abbreviation DAI) and Cerberus Capital Management LLC on the redemption of Daimler's 19.9% shareholding in Chrysler Holding LLC ("Chrysler") and other issues related to Cerberus's investment in Chrysler have been made considerably more difficult during the last weeks due to exaggerated demands by Cerberus.

These demands by Cerberus exceed the value of Cerberus' investment in Chrysler. For the acquisition of an 80.1% stake in Chrysler, Cerberus had invested USD 7.2 bn. The claims made now go beyond the framework of the contractually agreed possible obligations under representations and warranties. The new claims also include an allegation of conduct outside the ordinary course of business by Daimler during the time between signing and closing of the transaction as well as the allegation of incomplete information about the business. Daimler rejects these absurd allegations and the claims derived therefrom as being completely without substance.

Further information from Daimler is available on the internet at: www.media.daimler.com

About Daimler

Daimler AG, Stuttgart, with its businesses Mercedes-Benz Cars, Daimler Trucks, Daimler Financial Services, Mercedes-Benz Vans and Daimler Buses, is a globally leading producer of premium passenger cars and the largest manufacturer of commercial vehicles in the world. The Daimler Financial Services division has a broad offering of financial services, including vehicle financing, leasing, insurance and fleet management.

Daimler sells its products in nearly all the countries of the world and has production facilities on five continents. The company's founders, Gottlieb Daimler and Carl Benz, continued to make automotive history following their invention of the automobile in 1886. As an automotive pioneer, Daimler and its employees willingly accept an obligation to act responsibly towards society and the environment and to shape the future of safe and sustainable mobility with groundbreaking technologies and high-quality products. The current brand portfolio includes the world's most valuable automobile brand, Mercedes-Benz, as well as smart, AMG, Maybach, Freightliner, Sterling, Western Star, Mitsubishi Fuso, Setra, Orion and Thomas Built Buses. The company is listed on the stock exchanges in Frankfurt, New York and Stuttgart (stock exchange abbreviation DAI). In 2007, the Group sold 2.1 million vehicles and employed a workforce of over 270,000 people; revenue totaled euro 99.4 billion and EBIT amounted to euro 8.7 billion. Daimler is an automotive Group with a commitment to excellence, and aims to achieve sustainable growth and industry-leading profitability.

PRESS RELEASE:

Cerberus Capital Responds to Daimler Press Release

NEW YORK, Nov. 26 /PRNewswire/ -- Cerberus Capital Management, L.P. ("Cerberus"), one of the world's leading private investment firms, issued the following statement in response to Daimler's press release disseminated this morning.

"Cerberus and Chrysler have concluded that Daimler intentionally and materially breached its obligations under the relevant contracts relating to the Chrysler transaction. These serious breaches include, but are not limited to, misrepresentations relating to extraordinary changes in underwriting practices with regard to vehicle acquisition financing and leasing, as well as non-ordinary course lending and leasing practices.

"This conduct, among other reasons, led the parties to engage in lengthy negotiations toward a mutually agreeable settlement. Daimler has, unfortunately, refused to recognize the gravity of the claims relating to its deliberate conduct that resulted in the impairment of Chrysler's business and added to and multiplied the adverse effects of the current automotive and macro-economic environment. We are disappointed that Daimler has refused to negotiate in good faith in the face of the plain facts of which they are well aware. Accordingly, we are considering our strategic options and will have further comment after assessing the effects of Daimler's recent actions."

About Cerberus

Established in 1992, Cerberus Capital Management, L .P., along with its affiliates, is one of the world's leading private investment firms with approximately $27 billion under management in funds and accounts. Through its team of more than 275 investment and operations professionals, Cerberus specializes in providing both financial resources and operational expertise to help transform undervalued companies into industry leaders for long-term success and value creation. Cerberus is headquartered in New York City, with affiliate and/or advisory offices in Atlanta, Chicago, Los Angeles, London, Baarn, Frankfurt, Hong Kong, Beijing, Tokyo, Osaka and Taipei. More information on Cerberus can be found at www.cerberuscapital.com.

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