Cerberus Has Sold Off Most of Chrysler LLC Stake
Cerberus has also sold over 50% of GMAC as well
The timing isn’t yet clear, but the paper is reporting that the shares were sold to approximately 90 investors recently.
The newspaper said investors in the group that bought stakes in the automotive assets from Cerberus included Cerberus-controlled Aozora Bank of Japan, Avenue Capital, Cyrus Capital Partners, Franklin Templeton Investments and Oak Hill Advisors.
Both Chrysler and GMAC have turned out to be bad deals for Cerberus so far; Chrysler because of the poor automotive market and GMAC because of their losses related to their core mortgage business.
Cerberus invested $7.4 billion USD total in both businesses, but apparently has sold off most of the equity to other investors in a move that will mitigate potential losses further out. Oh, and a minor detail here; Cerberus earned over a billion dollars in fees as it offloaded their risk to the other investors.
Neither Chrysler or Cerberus commented on the report.
If true, the fact that Cerberus has reduced its stake in Chrysler so dramatically will produce a frenzy of chatter about just what sort of future Chrysler has as an independent auto manufacturer. It certainly looks like Cerberus is trying to make as graceful an exit as possible from what they now have deemed a bad investment.
Does that mean that the company is now open to selling Chrysler to another automotive company? There could be some buyers; Renault-Nissan, perhaps, or possibly a Chinese company or an Indian auto concern. And if that doesn’t prove to be a viable course of action, will Cerberus break up the company piecemeal so as to extract the maximum value from their failed business venture?
Whatever the course of future action, today’s news puts Chrysler’s future on very shaky ground.
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