GOP Rep claims Nardelli lied about Viper deals

According to a Bloomberg report issued yesterday, Congressman Darrell Issa has accused Chrysler CEO Robert Nardelli of failing to “disclose information material to ongoing bankruptcy proceedings.” He cited Dave Draper’s statement that a group of investors had offered Chrysler $35 million for the Viper, its plant, and related components and tools after the company put it up for sale in August 2008. The committee chair, Edolphus Towns, is currently reviewing Issa’s letter.

Dave Draper owned Cars & Concepts in the 1980s; the company installed convertible tops for the domestic automakers. Draper sold the company to MascoTech.

Before Chrysler filed Chapter 11, according to spokesman David Elshoff, no company had met the basic requirements for the Viper sale. Afterwards, Judge Gonzalez ordered anyone with an interest in the plant to submit a bid; just one group, Devon, did so.

According to court documents, Viper generated a profit of $16 million (before interest, depreciation, and amortization), despite selling just 289 cars. The retail price of the cars indicates that the revenue, assuming dealers paid full retail and all cars were base models with no options, would be around $25 million. That would not include merchandising revenues.

Given the profit margin of the car, an offer of $35 million (just over two years’ profit) may have been fairly rejected pre-bankruptcy, especially if the goal was to get at least three years’ profit. During bankruptcy, Draper’s group apparently did not bid; if Draper’s group only bid pre-bankruptcy and Chrysler did have higher goals, the accusations against Nardelli and Chrysler would have no merit.