Cerberus Gives Auto Equity to Labor, Creditors
By Michelle Krebs December 19, 2008Private-equity firm Cerberus Capital Management that owns Chrysler plans to hand over equity in the company's automotive operations to labor and creditors as part of its loan agreement with the U.S. government, Bloomberg News reports.
"Cerberus believes that concessions by all relevant constituencies will be required to facilitate a full restructuring and recapitalization of Chrysler," the New York-based firm said in an e-mailed statement Friday. The Chrysler investment is the largest in the firm's history.
Cerberus' announcement came after President George W. Bush announced General Motors and Chrysler will receive $17.4 billion in loans to keep operating in exchange for substantially restructuring their businesses.
Cerberus said Friday the global economic crisis had a "swift, unexpected, unprecedented and catastrophic effect on the American economy."
The Chrysler investment in 2007 accounted for about 7.5 percent of Cerberus's roughly $27 billion in assets under management, according to the statement.
LEAVE A COMMENT
Shouldn't tax payers get equity? Also, what are the details? How much equity for which party? This is a meaningless gesture unless it is a significant stake.
I assure you, the taxpayer wants nothing to do with that ticking timebomb. Congress I'm sure would not want to be in any way responsible for the massive impending layoffs.
ADD A COMMENT