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Cerberus Seeks Court Ruling To End Deal


Cerberus Capital Management, still trying to scuttle its $4 billion purchase of United Rentals Inc., said yesterday that it had filed a request for declaratory judgment in New York State Supreme Court.

Cerberus, a New York private investment firm, reiterated its argument that it is liable for only $100 million in damages if it terminates the deal, valued at $7 billion including the assumption of debt.

United Rentals, in a statement late yesterday, said again that it “stands ready to complete the merger transaction on the agreed-upon terms.”

United Rentals, which filed a lawsuit this week trying to force Cerberus to go through with the transaction, has said Cerberus must either give a justifiable cause for backing out of the deal or complete the purchase.

The dispute is the latest example of a leveraged-buyout deal falling victim to havoc in the credit markets. For months, buyout shops have been walking away from deals to buy companies, including the Acxiom Corporation and Harman International Industries.

The United Rentals dispute has been brewing privately for months, according to letters between the companies. Even though the deal was struck after turmoil began in the credit markets in June, a Cerberus executive, Steven F. Mayer, wrote to United Rentals’ general counsel, Roger E. Schwed, on Aug. 31 seeking a discussion about the terms. The request was prompted by “our concerns about recent unanticipated developments in the credit and financial markets.”

United Rentals replied that financial market turmoil was specifically excluded as an escape clause in the merger agreement.

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