Mercedes 2008 Annual Report Download - page 198

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Other guarantees. Other guarantees principally comprise
pledges or indemnifications related to the quality or timing of
performance by third parties or participations in performance
guarantees of consortiums. As of December 31, 2008, the best
estimate for obligations under other guarantees for which no pro-
visions had yet been recorded was €61 million (2007: €96 mil-
lion).
In 2002, our subsidiary Daimler Financial Services AG, Deutsche
Telekom AG and Compagnie Financière et Industrielle des Auto-
routes S.A. (Cofiroute) entered into a consortium agreement in
order to jointly develop, install, and operate under a contract
with the Federal Republic of Germany (operating agreement) a
system for the electronic collection of tolls for all commercial
vehicles over 12t GVW using German highways. Daimler Financial
Services AG and Deutsche Telekom AG each hold a 45% equity
interest and Cofiroute holds the remaining 10% equity interest in
both the consortium (Toll Collect GbR) and the joint venture com-
pany (Toll Collect GmbH) (together Toll Collect).
According to the operating agreement, the toll collection system
had to be operational no later than August 31, 2003. After
a delay of the launch date of the toll collection system, which
resulted in a loss of revenue for Toll Collect and in payments
of contractual penalties for delays, the toll collection system was
introduced on January 1, 2005, with on-board units that allowed
for slightly less than full technical performance in accordance with
the technical specification (phase 1). On January 1, 2006, the
toll collection system was installed and started to operate with
full effectiveness as specified in the operating agreement
(phase 2). On December 20, 2005, Toll Collect GmbH received
a preliminary operating permit as specified in the operating
agreement. Toll Collect GmbH expects to receive the final oper-
ating permit, and continues to operate the toll collection
system under the preliminary operating permit in the interim.
Failure to perform various obligations under the operating agree-
ment may result in penalties, additional revenue reductions
and damage claims that could become significant over time. How-
ever, penalties and revenue reductions are capped at €150
million per year until the final operating permit has been issued
and at €100 million per year following the issuance of the
final operating permit. These cap amounts are subject to a 3%
increase for every year of operation.
Beginning in June 2006, the Federal Republic of Germany began
reducing monthly payments to Toll Collect GmbH by €8 million
in partial set-off against amounts claimed in the arbitration pro-
ceeding referred to below. This offsetting may require the con-
sortium members to provide additional operating funds to Toll
Collect GmbH.
The operating agreement calls for submission of all disputes
related to the toll collection system to arbitration. The Federal
Republic of Germany has initiated arbitration proceedings
against Daimler Financial Services AG, Deutsche Telekom AG
and the consortium. According to the statement of claims
received in August 2005, the Federal Republic of Germany is
seeking damages, including contractual penalties and reim-
bursement of lost revenue that allegedly arose from delays in
the operability of the toll collection system. See Note 27 for
additional information.
Each of the consortium members (including Daimler Financial
Services AG) have provided guarantees supporting the obliga-
tions of Toll Collect GmbH towards the Federal Republic of Ger-
many relating to the completion and operation of the toll col-
lection system, which are subject to specific triggering events.
In addition, Daimler AG has guaranteed bank loans obtained
by Toll Collect GmbH. The guarantees are described in detail below:
– Guarantee of bank loans. Daimler AG issued a guarantee to
third parties up to a maximum amount of €165 million for bank
loans which could be obtained by Toll Collect GmbH. This
amount represents the Group’s 50% share of Toll Collect GmbH’s
external financing guaranteed by its shareholders.
– Equity maintenance undertaking. The consortium members
have the obligation to contribute, on a joint and several basis,
additional funds to Toll Collect GmbH as may be necessary
for Toll Collect GmbH to maintain a minimum equity (based on
German Commercial Code accounting principles) of 15% of
total assets (a so-called “equity maintenance undertaking”).
This obligation will terminate on August 31, 2015, when the
operating agreement expires, or earlier if the agreement is ter-
minated. Such obligation may arise if Toll Collect GmbH is sub-
ject to revenue reductions caused by underperformance,
if the Federal Republic of Germany is successful in claiming
lost revenue against Toll Collect GmbH for any period the sys-
tem was not fully operational, or if Toll Collect GmbH incurs
penalties that may become payable under the above mentioned
agreements. If such penalties, revenue reductions and other
events reduce Toll Collect GmbH’s equity to a level below the
minimum equity percentage agreed upon, the consortium
members are obligated to fund Toll Collect GmbH’s operations
to the extent necessary to reach the required minimum equity.