Workers say their DCX bid rebuffed

Toledo group eyes a shot at Chrysler

May 10, 2007

BY TIM HIGGINS

FREE PRESS BUSINESS WRITER

All options may not be on the table for the Chrysler Group after all.

Chrysler hourly workers trying to put together an employee-led buyout of the U.S. unit of DaimlerChrysler AG say they're not being taken seriously -- "hitting a wall" -- even though they have assembled a team of advisers and investment bankers.

A representative from the group said Wednesday it has been in contact with JPMorgan, DaimlerChrysler's investment bank, only to be told that talks with other bidders are far along.

"They said they are instructed by Germany not to hand out any information to anyone," Richard Caires, a Connecticut investor retained by the Chrysler Employee Ownership Committee to help put together a deal, told the Free Press. "He also said they're far along in the process and what you read in the papers is not far off from the mark -- meaning Magna."

A person familiar with the matter confirmed that the employee group's representatives have had contact with DaimlerChrysler's representatives.

An offer by Canadian auto supplier Magna International Inc. and its investment partner Onex Corp. has been generating the most buzz lately as a likely front-runner among bids to buy the Chrysler Group. Other bidders are believed to be private equity firms Blackstone Group and Cerberus Capital Management.

Magna Chairman Frank Stronach is sure to receive questions about the Chrysler bid during Magna's annual meeting today in Toronto.

The Chrysler Group's future was thrown into uncertainty in February when DaimlerChrysler AG Chief Executive Dieter Zetsche indicated the U.S. division might be sold.

While several interested groups have emerged publicly, DaimlerChrysler officials seem to be taking the Magna-Onex, Cerberus and Blackstone groups the most seriously.

The employee group emerged during the DaimlerChrysler annual meeting in Berlin in April, when a shareholder, wearing an orange T-shirt that read: "You are leaving the American sector" out of what she called solidarity for the UAW, read a letter from the Toledo-based group asking for consideration.

Since then, Michele Mauder, the head of the employee group, has worked to put something together.

The group formed a limited-liability corporation and signed up Morpheus Capital Advisors of New York City. The group is trying to make the case that it is the best choice for the future of the employees.

"We've been asking for the financial books. Now that we have committed ourselves to an investor and got our financial banking from New York banks, Daimler and JPMorgan will not let us see the books. We are hitting a wall," said Mauder, a UAW member who works at the Chrysler Jeep plant in Toledo. "There are a few they are letting in. Doctor Z has said numerous times that all options are on the table, but if that is true, we need to know what's going on behind the scenes."

DaimlerChrysler's practice has been not to comment on prospective bidders.

UAW President Ron Gettelfinger has said repeatedly that the union's goal is to keep DaimlerChrysler together. He has referred to the Toledo group's proposal as sketchy.

Mauder's group, which she says has about 50 people on the committee, has met with officials from Kirk Kerkorian's Tracinda Corp., she said.

Kerkorian, who tried a Chrysler takeover in the 1900s, has offered $4.5 billion to buy Chrysler, but the offer apparently has been pushed to the sidelines because of his contentious history with the company.

KeyBanc Capital Markets has said the Magna-Onex offer is about $5 billion, but its true value could be much more to DaimlerChrysler if the buyer took on its pension and health-care liabilities, which have been estimated to be worth as much as nearly $20 billion.

Kerkorian has proposed that the UAW be given an ownership stake in Chrysler in exchange for union concessions on health care.

"Whatever the unions are going to negotiate for givebacks ... has to be voted on by the rank and file. Well, the rank and file are sitting here saying we are interested in pursuing this," said Caires.

He said the group will be able to put together financing. "We are confident that we can raise the necessary capital," he said. "What Michele's group is going to need is getting Daimler to say, 'OK, let's see what you got.' That's it, that's all she needs. What she has been getting is polite lip service from the union and from Daimler. They don't want this to happen."

He added: "They are hoping this goes away."