Getrag says its transmission deal with Chrysler is dead

October 18, 2008 - 12:01 am ET

Getrag Transmission Manufacturing LLC said yesterday that Chrysler LLC has
canceled a deal for Getrag to build fuel-saving dual-clutch transmissions
for Chrysler at a proposed plant in Tipton, Ind.

Chrysler canceled the plant and supply agreement after meeting with Getrag
executives Friday to settle a dispute over financing the project, Getrag
said in a statement.

Chrysler had sued Getrag this month over what it alleges was a failure by
Getrag to raise $300 million to initially fund tooling and equipment for the
transmissions. Getrag argues that it had lined up a group of German banks
for the money with the proviso that Chrysler escrow $300 million to
ultimately pay for the tooling. Getrag said it would countersue Chrysler for
damages and for reimbursement of the money it already had in the project.
The plant is mostly built but not equipped.The cancellation means that
Chrysler will have to find an alternative supplier for dual-clutch
transmission or do without them.

The plant was scheduled to begin production next year to produce for the
Dodge Journey, Chrysler Sebring and perhaps other vehicles.

Statement from Getrag

Statement from GETRAG Transmission Manufacturing LLC Regarding the Planned
Facility in Tipton, Indiana, to Supply Fuel Saving Dual-Clutch Transmissions
to Chrysler LLC

STERLING HEIGHTS, Mich., Oct. 17 /PRNewswire/ -- GETRAG Transmission
Manufacturing LLC met with Chrysler LLC in an effort to resolve the issues
surrounding its agreement to supply transmissions to Chrysler and related
financing necessary to develop a new facility in Tipton, Indiana.

Chrysler LLC has rejected the financing structure that GETRAG had offered
together with its banks, which required Chrysler to secure some of their
obligations under the supply agreement, and has elected to terminate the
supply agreement and related documents.

GETRAG is astonished by this action and will pursue all rights and remedies
under the terms of the supply agreement for, among other things,
reimbursement of all expenses incurred by GETRAG and its suppliers in
connection with the project.

With respect to the pending lawsuit, GETRAG maintains that Chrysler's claims
are without merit. GETRAG intends to vigorously defend the lawsuit and file
counterclaims against Chrysler to recover damages suffered by GETRAG caused
by Chrysler's conduct.