Managing the Financial Side of Commercial Fleets

Hughes Telematics & Chrysler Terminate Contract

August 28, 2009

AUBURN HILLS, MI - In the Quarterly Report published by Hughes Telematics last week, the company announced it has stopped working with Chrysler to deploy telematics services by the end of 2009:

"On April 30, 2009, Old Chrysler filed for bankruptcy protection under Chapter 11 of the United States bankruptcy code. On June 10, 2009, New Chrysler purchased substantially all of the assets of Old Chrysler in the bankruptcy process. At a hearing held on July 16, 2009, Old Chrysler rejected certain contracts, including the Company's telematics services contract with Old Chrysler, and therefore, the contract was terminated.

The Company had been in negotiations with New Chrysler concerning a new telematics services agreement. However, the parties recently reached an impasse in the negotiations, and as a result, the Company discontinued working with New Chrysler to deploy the Company's hardware and launch the Company's services in the fourth quarter of 2009 as previously planned.

In light of the termination of the Company's contract with Old Chrysler and the recent impasse in negotiations with New Chrysler, if the impasse is not resolved promptly, the Company will evaluate the amounts capitalized in connection with the provision of telematics services under the contract with Old Chrysler for impairment. On June 26, 2009, the Company obtained a waiver from its senior secured lenders under the Credit Agreement providing that the rejection of the Old Chrysler contract will not impact the Company's existing obligations under the Credit Agreement."


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