Mercedes 2009 Annual Report Download - page 193

Consolidated Financial Statements |Notes to Consolidated Financial Statements |189
2. Significant acquisitions and dispositions of interests in
companies and of other assets and liabilities
Acquisitions
Tognum. In 2008, the Group acquired an aggregate 28.4% stake
in Tognum AG (Tognum). The acquisition costs amounted to
€702 million in cash. The Group accounts for its equity interest in
Tognum using the equity method (see also Note 12 for further
information).
Dispositions
Daimler Financial Services. In line with the ongoing concentra-
tion on the automotive business, Daimler Financial Services dis-
posed of non-automotive assets subject to finance leases (mainly
leveraged leases) in 2009, which resulted in cash inflows of €825
million. After consideration of the costs of the transactions,
the Group recorded a pre-tax loss of €31 million within cost of
sales in the 2009 consolidated statement of income (loss). The
expense is allocated to the Daimler Financial Services segment.
In addition, non-automotive assets subject to leveraged leases
are presented separately as assets held for sale in the consolidat-
ed statement of financial position as of December 31, 2009
(€310 million). Measurement of these assets at fair value less
costs to sell resulted in a pre-tax expense of €69 million in 2009,
which is included in cost of sales in the consolidated statement
of income (loss). The expense is allocated to the Daimler Finan-
cial Services segment. For further information on sales of non-
automotive assets from the leasing business, see Notes 13 and 18.
Chrysler. On May 14, 2007, the Board of Management of Daimler AG
decided to transfer a majority interest in Chrysler and the re-
lated financial services business in North America to a subsidiary
of the private-equity firm Cerberus Capital Management, L.P.
(Cerberus). On May 16, 2007, the Supervisory Board of Daimler AG
approved the transaction; the transaction was consummated on
August 3, 2007.
On August 3, 2007, Cerberus made a capital contribution of €5.2
billion (US $7.2 billion) in cash for an 80.1% equity interest in the
newly established company Chrysler Holding LLC (Chrysler
Holding), which controlled the Chrysler activities. Of that cash,
Daimler withdrew €0.9 billion (US $1.2 billion). As a result,
Daimler retained a 19.9% equity interest in this entity, which was
accounted for using the equity method until the redemption of
the remaining investment on June 3, 2009 (see also Note 12).
In connection with the closing of the transaction in August 2007,
subsidiaries of Chrysler Holding LLC repaid €24.7 billion of
liabilities to the Group in cash.
In addition, certain previously outstanding guarantees provided
by the Group for the benefit of Chrysler continue to be outstand-
ing. At December 31, 2009, the amount of those guarantees
was €0.3 billion. As coverage of the liabilities underlying these
guarantees, Chrysler provided collateral to an escrow account
of €0.2 billion as of December 31, 2009.
Based on a binding term sheet signed in April 2009, Daimler and
Cerberus entered into a redemption agreement in June 2009.
As a result, since June 3, 2009, Daimler no longer has any equity
interest in Chrysler Holding or its subsidiaries and all Daimler
representatives resigned from the boards of Chrysler Holding and
its subsidiaries.
The binding term sheet also provided for a settlement agreement
covering issues relating to Chrysler which Daimler, the US Pen-
sion Benefit Guaranty Corporation (PBGC), Chrysler LLC (Chrysler)
and Cerberus entered into in June 2009. Among other matters,
Chrysler and Cerberus waived all claims that might arise from the
representations and warranties made in the contribution agree-
ment dated August 3, 2007, including claims by Cerberus that
Daimler allegedly improperly managed certain issues in the period
between the signing of the contribution agreement and the
conclusion of the transaction, as well as certain other claims
against Daimler.
In addition, in June 2009, Daimler paid US $200 million into
Chrysler’s pension plans and will make further payments of
US $200 million in each of the next two years. The 2007 Daimler
pension guarantee of US $1 billion vis-à-vis the PBGC has been
replaced by a new guarantee in an amount of US $200 million
that will remain in place until August 2012.