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Headlight News Weekly for Dec. 4, 2000


DC:NO BIG CUTS, YET Top DaimlerChrysler officials have said that, although there won't be any job cuts announced in the company in the next few days, the company is looking for redundancies between its U.S. Chrysler operations and home operations in Germany, according to a Reuters report. Chief executive Jeurgen Schrempp also once again denied rumors that the company may be considering the option of selling Chrysler. New Chrysler chief Dieter Zetsche is currently devising a Chrysler restructuring plan to return Chrysler to profit, although worker morale in Auburn Hills is reportedly at a record low. Any significant changes to Chrysler's operations would require negotiation with the United Auto Workers. The current 1999 agreement runs through 2003.
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UAW REFUSES RENEGOTIATION The United Auto Workers union has said that it will not reopen its current four-year DaimlerChrysler contract to renegotiation. The current contract reportedly makes permanent layoffs difficult for the company. Last week, DaimlerChrysler was rumored to be seeking renegotiation with the union. UAW officials are currently already at odds with DaimlerChrysler over their failure to use more unionized suppliers as promised and their resistance to union recruitment at the Alabama Mercedes-Benz plant. The current contract, which was signed in 1999, won't expire until September 14, 2003.
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KERKORIAN SUES DC FOR MERGER LIES Investor Kirk Kerkorian has waged a lawsuit against DaimlerChrysler, alleging that chairman Jeurgen Schrempp openly lied to Chrysler shareholders about the specifics of the 1998 "merger." Kerkorian, represented through his investment company, Tracinda Corporation, says that he would have never voted for the takeover if company officials had not blatantly lied to shareholders and the public. Kerkorian seeks $2 billion in actual damages, mostly due to the lost share value, and at least $6 billion in punitive damages. In 1995, Kerkorian had placed a failed bid to buy the automaker for $23 billion.
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DEUTSCHE BANK STANDS BEHIND SCHREMPP DaimlerChrysler's biggest shareholder, Deutsche Bank, has issued a statement in defense of current chief executive Jeurgen Schrempp. The bank released a statement saying that it remains solidly behind current DaimlerChrysler AG management. Earlier this week, billionare Kirk Kerkorian announced an $8 billion lawsuit waged by his investment company, Tracinda Corporation, alleging that the company lied to its shareholders, and he would have never voted for the 1998 merger if the original plan called for Chrysler to be delegated as a division rather than an equal. Tracinda owns four percent of DaimlerChrysler stock, while Deutsche Bank owns twelve percent, and the Kuwait Investment Authority owns 7.4 percent.
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DC LAWSUIT LANDSLIDE ENSUES Following billionaire Kirk Kerkorian's $8 billion lawsuit waged against DaimlerChrysler AG earlier this week, a class action lawsuit has been launched by law firm Milberg Weiss (www.milberg.com) in a Delaware court, for violations of federal securities laws. The lawsuit, on behalf of all shareholders at the time of the merger, seeks damages on the basis of various "untrue statements" to shareholders, with management misleading them to believe that it was a "merger of equals." Also, law firm Wolf Haldenstein Alder Freeman filed a suit seeking class-action status against the company, and at least two other New York firms representing investors followed suit.
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