Bombardier Inc. of Montreal, Que., has announced that it is filing a $1.4 billion claim for damages against DaimlerChrysler AG in connetion with its acquisition of DaimlerChrysler Rail Systems GmbH (Adtranz).
Bombardier says that the move comes after discussions with DaimlerChrysler failed to result in an agreement as to the value of the adjusted net assets acquired.
The claim is being filed under the arbitration process governed by the rules of arbitration of the International Chamber of Commerce, as set forth in the Sale and Purchase Agreement (SPA).
Under the SPA, DaimlerChrysler made contractual representations and guarantees to Bombardier, they claim, including confirmation of a level of equity of Adtranz, on the closing date of April 30, 2001. Bombardier claims its call for damages is largely based on material breaches of contractual representations and guarantees, including significant deficiency in the value of the adjusted net assets acquired.
Such deficiency results from the application of United States generally accepted accounting principles (U.S. GAAP) and from unrecorded costs required to complete contracts with third parties.
Bombardier’s claim will be in the order of 1 billion euros ($1.4 billion Cdn). Bombardier Management has established the purchase price allocation taking into account all relevant information as detailed in its third quarterly report to shareholders of Nov. 26, 2001.
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