Perelman firm sues billionaire Rennert

Wed Jun 20, 2012 6:34pm EDT

* Rennert accused of using company as ATM machine

* Lawsuit stems from AM General deal

* Rennert company says claims are baseless

June 20 (Reuters) - Billionaire investor Ira Rennert unjustly enriched himself by causing a company he controls to lend his struggling Renco Group $109 million, according a lawsuit by a Ronald Perelman-affiliated company.

A unit of Perelman's MacAndrews and Forbes Holding Inc, which invested in the company that made the loans, sued Rennert to force Renco for repayment.

The lawsuit stems from a 2004 agreement in which MacAndrews bought a majority stake in truckmaker AM General, a company best known for bringing military-style Hummers to consumers in 1992 before GM bought the brand name.

Private equity firm MacAndrews is the holding company for Perelman's investments, which also include cosmetics maker Revlon.

The 2004 agreement involved forming three limited liability companies in which firms affiliated with Rennert and MacAndrews were members.

The lawsuit accuses Rennert of using one of those companies, Ilshar Capital LLC, to provide three below-market loans to Renco.

Renco filed its RG Steel business into bankruptcy on May 31 and the lawsuit said Rennert's U.S. lead business is the subject of numerous government investigations.

MacAndrews' lawsuit accused Rennert and one of his affiliated companies of using Ilshar "as a convenient drive-thru teller to which they pull up and ask themselves for as much money as they like."

A Renco spokesman said the "facts will show the claims by MacAndrews & Forbes are baseless and completely without merit."

Rennert, who is listed as the 55th richest person in the United States by Forbes, was unavailable for comment.

A spokeswoman for MacAndrews and Forbes declined to comment.

The lawsuit also said Ilshar had violated agreements with the MacAndrews unit by investing with Ezra Merkin, who has been accused of steering client money to Ponzi schemer Bernie Madoff. Those investments led to large losses, according to the lawsuit.

The case is AM General Holdings LLC v The Renco Group, Ira L Rennert and ILR Capital LLC, Delaware Court of Chancery, No. 7639.

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