Cerberus, RAM file suit against United Rentals

By Lisa Kerner

Charlotte, N.C., Nov. 21 - Cerberus Capital Management, LP and Cerberus Partners LP filed suit in New York State Supreme Court seeking a declaratory judgment against United Rentals, Inc. and seeking to ensure that United Rentals honors "contractual undertakings" as part of the July 22 merger agreement.

Cerberus and its affiliates, RAM Holdings, Inc. and RAM Acquisition Corp., "negotiated for and received a liability cap of $100 million," according to a Cerberus news release.

United Rentals "expressly agreed" that the damages were not to exceed $100 million, according to Cerberus, who said the negotiations were made in light of uncertainty in the financial markets at the time.

Cerberus said, "United Rentals is now engaged in an effort to rewrite history and the contracts into which it entered, claiming that it has the right to compel the RAM Entities and Cerberus to go forward with the merger transaction."

It was previously reported that United Rentals filed suit against RAM to compel RAM to complete their agreed upon transaction.

The lawsuit contends that RAM is "directly violating the merger agreement and acting in bad faith." In addition, United Rentals said RAM does not "have the right to pay a reverse break-up fee and simply walk away" especially since there is no financing barrier to completing the merger, a prior news release stated.

Cerberus agreed in July to acquire United Rentals for $34.50 cash per share. United Rental shareholders approved the merger deal at a special meeting on Oct. 19.

United Rentals is a Greenwich, Conn., equipment rental company with a network of 690 rental locations in 48 states, 10 Canadian provinces and Mexico.

Cerberus is a private investment firm based in New York.

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