Comments on: Daimler, Cerberus dispute over 19.9 percent stake in Chrysler

By: nowei

nowei — Fri, 28 Nov 2008 03:38:54 +0000

I think the key here is that DAIMLER VALUES Chrysler at zero. As I understand it, Cerberus is basically arguing that Daimler is currently overvaluing Chrysler (even at zero), and more importantly also did so in the past.

It’s kind of like buying a television at Costco. Assume Costco sells you a television they say is worth $2000, and you pay it. You get it home only to find out that it’s a $500 television that doesn’t even work (and maybe also destroyed your TiVo somehow). At this point, you take the television back to Costco in search of a refund because Costco essentially misrepresented the product they sold you.

That’s arguably an oversimplification, but the basic principles are the same. And I’m not necessarily siding with Cerberus, just trying to clarify their position.

By: sharpie

sharpie — Thu, 27 Nov 2008 07:11:04 +0000

^^You are missing the point. When Chrysler is full depreciated, it is worth zero from an accounting point of view. If Daimler makes some money selling the remaining 20%, it should then be reported as capital gain after the sale goes through.

Whether Chrysler gets the $25 million bailout has no effect of the zero accounting value. It will only affect the book if Daimler makes a sales, and logically with a higher price tag, resulting in bigger capital gain on Daimler’s book. So no, the 0 is still a 0.

By: dmlgc

dmlgc — Thu, 27 Nov 2008 04:52:26 +0000

I think folks are missing the point,”20% of 0 is 0″.
But if you get a piece of the $25 billion bailout suddenly that 0 isn’t 0 anymore.

By: Arbiter

Arbiter — Thu, 27 Nov 2008 02:07:39 +0000

So this would be the 19.9% thar Daimler has on the books as having “NO value” per the last accounting they gave the German government?

Offer ‘em 20 bucks and all the Crossfires still on the lots………….

By: procrastinate now

procrastinate now — Thu, 27 Nov 2008 01:30:09 +0000

Beemerdude, that’s close to what’s going on. Cerberus wants to sell all of Chrysler and they want Daimler to PAY Cerberus for the 20% Daimler still owns. That’s called creative accounting. Given that Daimler considers it’s remaining stake in Chrysler worth zero, that’s also called wishful thinking.

By: bolex

bolex — Thu, 27 Nov 2008 00:40:04 +0000

LOL—johnnycanuck too funny!

By: johnnycanuck

johnnycanuck — Wed, 26 Nov 2008 23:53:21 +0000

I don’t know what any of this means so I’m just going to sit here and hum the theme to Hogan’s Heroes.

By: beemerdude

beemerdude — Wed, 26 Nov 2008 23:48:32 +0000

Mayer_Ray: No, that’s not what is going on. Cerberus wants to sell ALL of Chrysler to a third party, but they can’t do it until Dailmer sells Cerberus the 20 % that they (Daimler) still owns.

By: JakeK66

JakeK66 — Wed, 26 Nov 2008 23:21:54 +0000

20% of a company who owes probably around 20billion is like 4 billion… See thats why they want Daimler to pay them.

By: ochy38

ochy38 — Wed, 26 Nov 2008 22:11:47 +0000

cerberus wants daimler to pay? um..

By: TOZO

TOZO — Wed, 26 Nov 2008 21:36:57 +0000

Daimler just can’t do math: 20% of 0 is O!

By: mayer_ray_nagin

mayer_ray_nagin — Wed, 26 Nov 2008 21:24:44 +0000

Do I have this right? Cerberus is demanding DAIMLER PAYS CERBERUS to take Chrysler off its hands?

LMFAO.

Not sure about the accounting on this, but if Daimler holds 20% of Chrysler it may need to record 20% of Chrysler’s loss on its books, so maybe it is worth it for Daimler to pay up. Given Chrysler’s losses Cerberus may have the upper hand.