REPORT: Cerberus sells more than half of Chrysler and GMAC, Chrysler denies
by John Neff on Jun 2nd 2008 at 12:28PM 
UPDATE: Chrysler just released the following statement: "Cerberus has not reduced or made any changes to its equity stakes in GMAC or Chrysler since the closing of either transaction. Cerberus continues to have voting control over both investments. It is common knowledge, and has been widely reported, that Cerberus made these investments side-by-side with its co-investors at the time of closing. As a general rule, Cerberus does not commit more than 5% of the capital of any of its funds to any single investment."
The Detroit Free Press is reporting via the Financial Times that Cerberus Capital Management has sold more than 50% of its stake in Chrysler LLC and GMAC LLC to a group of around 90 investors. The Freep reports that the investment firm earned up to $1 billion for selling parts of its stake in both companies. Cerberus bought a controlling stake in GM's financial unit back in April of 2006 for $14 billion and bought up Chrysler from Daimler in May of 2007 for $7.4 billion.
Automotive News actually got in touch with a senior Chrysler official today, however, who said bluntly, "Cerberus has not sold any equity in Chrysler." What may be causing the confusion is that when Cerberus bought up 80.1% of Chrysler, it had already aligned itself with co-investors. These 90 investors may have been involved in the transaction from the beginning and own a stake in Cerberus' stake of Chrysler and GMAC. The $1 billion, meanwhile, would then be what Cerberus earned in fees for bringing on the additional investors.
There's clearly a lot of confusion this morning surrounding the Financial Times report and not until Cerberus speaks will we be able to ascertain the nugget of truth amidst all the conjecture.
[Source: The Detroit Free Press, Automotive News]
The Detroit Free Press is reporting via the Financial Times that Cerberus Capital Management has sold more than 50% of its stake in Chrysler LLC and GMAC LLC to a group of around 90 investors. The Freep reports that the investment firm earned up to $1 billion for selling parts of its stake in both companies. Cerberus bought a controlling stake in GM's financial unit back in April of 2006 for $14 billion and bought up Chrysler from Daimler in May of 2007 for $7.4 billion.Automotive News actually got in touch with a senior Chrysler official today, however, who said bluntly, "Cerberus has not sold any equity in Chrysler." What may be causing the confusion is that when Cerberus bought up 80.1% of Chrysler, it had already aligned itself with co-investors. These 90 investors may have been involved in the transaction from the beginning and own a stake in Cerberus' stake of Chrysler and GMAC. The $1 billion, meanwhile, would then be what Cerberus earned in fees for bringing on the additional investors.
There's clearly a lot of confusion this morning surrounding the Financial Times report and not until Cerberus speaks will we be able to ascertain the nugget of truth amidst all the conjecture.
[Source: The Detroit Free Press, Automotive News]
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Reader Comments (Page 1 of 2)
Ben 12:36PM (6/02/2008)
...and we care because....?
Reply
wally 3:49PM (6/02/2008)
Chrysler was the best in racing before you could buy wins. WWE-NASCAR banned Chrysler car because they were to fast. Today Toyota rules because they buy all air time nascar can't sell+ toyota donated est $100m to charities in nascars name!!!!!!!!!
elprogramer 4:24PM (6/02/2008)
Sigh.
Some of us are here for love of the automotive business, not merely cars themselves.
MikeDC 7:18PM (6/05/2008)
We care because Chrysler is a major American corporation that employs thousands of people trying to make a living and provide for their families. And we care because Chrysler is at the core of America's automotive history. It's a storied company that has make great contributions to this industry. Don't kick 'em cause they're down. There are people involved here.
LethalPhoenix 12:42PM (6/02/2008)
@Ben: Chrysler used to be the best in all american racing. Before your time, I am sure.
Reply
Ben 2:29PM (6/02/2008)
"Used to be"? So they're not now? My question still has not been answered.
Why do I care?
Why do "we" care?
gt2378b 2:37PM (6/02/2008)
Because it's news about a car manufacturer and you . . . like cars?
Did that help?
Gunnar 12:43PM (6/02/2008)
Trouble.
Reply
andrinoe 1:01PM (6/02/2008)
This means trouble for the U.S., the U.S. is on sale folks, to the highest bidder, the dollar is @!#$ and we are a bargain. That goes for everything, not just car manufacturers.
FThorn 1:12PM (6/02/2008)
As I sat in a room one night with M. Forbes Jr., he said that investors put their money in the place(s) that they think will bring a good return on their money. Investment in US assets (companies, real estate) is an indicator that they are good investments. How much of this money goes to other countries' assets, respectively?
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Brent 1:23PM (6/02/2008)
I would buy Chrysler stock today if they went public.
SteveRB 2:01PM (6/02/2008)
The only reason I'd buy Chrysler stock today(if it were available) is to turn my $10,000 into a $1,000 investment. Anything other than that is wishful thinking.
DKB_SATX 1:14PM (6/02/2008)
Hmmm... I don't see that picture as being particularly happy or homosexual. Maybe nerdy is the word you were looking for?
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CBESSEMER 2:05PM (6/02/2008)
Chrysler is doing quite well considering the fact that they are working to get out of a hole that Daimler dug them into. The main thing that is killing the US auto industry is the UAW, with their laziness and overpaid positions. Assembly Line workers should not make as much as college graduates...
Reply
zamafir 2:37PM (6/02/2008)
yup, the whole 300m debacle, we all remember how Daimler screwed up royally with that model...
George 4:22PM (6/02/2008)
@zamafir
Surely not the 300M which won 1999 Motor Trend's "Car of the Year" or that made Car and Driver's 10 best list TWICE (1999/2000)!
elprogramer 4:26PM (6/02/2008)
"Laziness".
I'm sure you'd know that from your first-hand experience.
zamafir 5:26PM (6/02/2008)
@George, it's called sarcasm, the 300m was entirely a result of diamler.
IK47 2:30PM (6/02/2008)
ahhhhhh
yugimons!!
Reply
john riley 3:39PM (6/02/2008)
Are any of the buyers Chinese auto companies?
Reply