Cerberus CEO says U.Rentals liability $100 million

By Jonathan Hurdle

GEORGETOWN, Delaware (Reuters) - Cerberus Capital Management LP's CBS.UL chief executive testified on Tuesday that his firm's liability in withdrawing a $4 billion offer for United Rentals Inc (URI.N: Quote, Profile, Research, Stock Buzz) is limited to $100 million, and his firm cannot be forced to complete the deal.

Stephen Feinberg's statements in court on Tuesday deflated hopes for a settlement between Cerberus and the equipment rental company in what has been a contentious battle over a broken leveraged buyout.

Shares of Greenwich, Connecticut-based United Rentals dropped more than 5 percent on Tuesday, erasing nearly all of its gains from Monday when settlement discussions delayed the court hearing by a day.

Feinberg reiterated his firm's stance that Cerberus is allowed to walk away from the deal and pay a $100 million fee to the company.

URI's lawsuit is against RAM Holdings Inc, a Cerberus acquisition vehicle.

Cerberus withdrew its $34.50-per-share offer for United Rentals in November. United Rentals sued Cerberus in a bid to force completion of the deal, citing a clause in the merger agreement that United Rentals believes prohibits calling off the transaction.

United Rentals' stock was down 5.07 percent to $23.02 in early afternoon trade on the New York Stock Exchange.

United Rentals stock dropped more than 30 percent on November 14 when the company said that Cerberus it was withdrawing the original offer. Talks over a revised bid were unsuccessful.