Cerberus Agrees To Give Up 80% Stake In Chrysler

New York Times:

For Stephen A. Feinberg, the long road back from the most disastrous investment of his career -- Chrysler L.L.C. -- began last week around a polished wood table inside the Treasury Department.

It was not the road he had envisioned when his private investment firm, Cerberus Capital Management, bought Chrysler in the summer of 2007.

Read the whole story: New York Times

Comments

[LADawson]

Cerberus refused to inject capital into Chrysler, despite realizing that Chrysler needed it badly the second they got involved. What is the point of being a capital management firm if you don't bother to manage the capital of your holdings? Their obvious plan was to part it up, keep what they could make money with, and sell off the rest of the pieces, hopefully for a profit, like they did with so many other companies, like Mervyns and Albertsons. They didn't predict the pieces would be worthless when they went to offload them.

[drymartini1]

Cereberus never planned to turn around Chrysler. It was basically bought as a "strip and flip" operation. but unfortunately for them, the market turned sour bigtime and they got caught their hand jammed in a vise. thats all.

not to say, Private equity companies are bad per se. they can transform companies around better than a lot of public company ceo's.

[AZ AF VET]

The demise of Chrysler is due to the poor quality of it's products. Even Daimler Benz couldn't improve upon the quality. The last thing that Chrysler needed was to be bought by a financial group who didn't know anything about the auto industry and didn't care about it either. The only prize they they wanted was Chrysler Financial. This is what worries me about the new Car Czar who is a Wall Streeter and has no real knowledge of the auto industry. The person that the President should have picked was Lee Iaccoca, the man that saved Chrysler the last time. People know and respect him by the financial industry , auto industry and general public

[dgscol]

Actually, Cerberus was a monkey on the back of the company. They separated out the Financing to keep the company from offering deals to increase sales. I am sure that the whole situation was to keep Chrysler in a vice grip, to keep it sliding into the abyss. The payout to Cerberus, is from Wall St, for bringing the company down. Cerberus was a hastily put together enterprise, that intended to keep Chrysler on the downturn, even after the Bush admin was over.

[dgscol]

This sort of arrangement is possible, with no risk bailout situations like the one we find ourselves in.

[drkazmd65]

Just my *humble* take on this,...

There really isn't a cost to Cerberus of 'giving' up their stake in what used to by Chrysler if there is nothing but liabilities associated with doing so,...

So why are 'we', the taxpayers, taking this load off their books and eating (again) their liabilities for them? Let them empty their own accounts paying off their leverage - then we can pick up the pieces.

It really galls me to be bailing out the likes of Dan Quayle,...

[Enid]

exactly correct #65
How about the cash that these devil took from their acquisition of Chrysler.

[nogornc]

These are the same folks from that wonderful company, ACS! This is about the worst of the worst all in one place. While they are all together they should burn it down or better give the company to the UAW for $1!

[Ironquill]

Is this the outfit funding the robocalls?

[davidwayneosedach]

Just how much is their 80% stake worth as Chrysler teeters on bankruptcy?

[notAMoron]

Lets crunch the numbers: 80% of nothing is... nothing

[Bettysdad]

Is the guy with the gun from Detroit or Wall Street?

[notAMoron]

From detroit on his way to wall street

[cjt1957]

He is going for lunch. This is what you have to do there to take a walk....

[LHoney]

What is the picture with this story??? Couple of guys with automatic weapons??

[jeffp26]

Nice trade Stevie!!!!

[drymartini1]

Cereberus should just give 80% of the chrysler stake to Fiat for nominal amount of 1$ (not per share, total 1$).

if you want to avoid liquidation of chrysler, thats the only way. otherwise its liquidation time.

[notAMoron]

If I were Fiat I would not touch Chrysler with a 10 ft pole if they paid me to take it.

[sposton]

Deindustrialization of America is near complete.

[RandVictims]

Welcome to Western Kuwait.

[lj9283]

Cerberus is giving up it's equity stake in Chrysler, but what about the $500 Million loan?

Cerberus is listed as one of Chrysler's creditors to the tune of $500 Million. So if creditors are given equity in lieu of payment, does that mean that Cerberus becomes a major player again?

Is there some smoke and mirrors going on here.

[sposton]

Smoke and mirrors.

[RobinSeattle]

Chrysler has always made crap and Cerberus' investment in that company was an act of immense stupidity. Then they compound that by hiring Dan Quayle. What does Quayle know about finance? He's a lawyer and national punchline in a addition to being an albatross around the neck of G.H.W. Bush.

[Rog49Thomas]

What a generous guy that Steve is!

He agreed to give up his worthless stake in Chrysler in exchange for more government support tor two other of his shaky investments in the automotive sector.

Presumably the other part of the trade off was that the Gubmint take over Chrysler and support it.

Now that's altruism with a capital "A".

[Rog49Thomas]

Of course Cerebus' investment in Chrysler makes perfect sense.

Invest a really large amount of money in a dying industry and when you do buy the weakest of the existing companies.

It's a proven way to make a small fortune.

Of course, you've got to start with a large fortune.

But it will work every time.

[Enid]

Bet these guys make money at every twist and turn.
Don't feel sorry for them, they got your money.