Chrysler Swallowed by 3 Headed Dog (Compendium)

[Demeter]

Secretive Cerberus Operator

Co-founder William L. Richter deals with investors, and lieutenants such as former Vice-President Dan Quayle jet around the globe to seal deals, but they are the front men. Behind the scenes at Cerberus, which just acquired Chrysler, is the secretive Stephen A. Feinberg.

The low profile Feinberg moves in rarefied circles. Defense Secretary Donald H. Rumsfeld was an investor in 2001 in his fund, according to government ethics disclosures. Hedge-fund legend Michael Steinhardt is a shareholder and director in Cerberus' lending arm, Ableco LLC. Michael Dell's private-investment firm has joined with Cerberus and home-builder Lennar Corp. to develop upscale residential communities on the former El Toro Marine Corps Air Station in Irvine, Calif. His roster of investors also includes public pension funds such as TIAA-CREF and the California State Teachers' Retirement System, reports Business Week.

But Feinberg hsan't been interviewed and he hasn't been photographed.

Says Business Week, Feinberg shuns the social whirl of charity galas and opening-night parties. Last year he agreed to co-host a dinner at The Waldorf-Astoria in New York with the Today show's Katie Couric and GSO Capital Partners co-founder Douglas I. Ostrover to help raise money to fight Parkinson's Disease, which two of Feinberg's friends' fathers have, says a person close to him. Then he failed to show up. It turns out that while he agreed to lend his name to the affair and make a donation -- he characteristically declined to attend.

As for his hedge fund operations, while many funds stick to a single, sharply focused strategy, Feinberg casts a wide net. Not content simply to trade securities the way other funds do or to assemble assorted companies for resale in the same way as many buyout firms, he's forging what looks more like an integrated industrial conglomerate than an investment firm. His secret weapon: a deep bench of 80 seasoned executives who troll the world for investment opportunities and stand ready to parachute in and run the companies he buys. Put all the elements together, says David M. Rubenstein, Carlyle Group co-founder and managing director, and "Feinberg may have perfected a new business model."

posted by Raymond Weber @ 2:16 PM
http://www.economicpolicymonitor.com/

------------------------------------------------------------------------------------------
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/14/AR2007051401492.html?referrer=email

Cerberus's Sharp-Toothed Ways
Firm Has History Of Turnarounds Fueled by Cuts

By Frank Ahrens
Washington Post Staff Writer
Tuesday, May 15, 2007; D01


...New York's Cerberus bought more than 600 struggling Albertsons supermarkets last year and laid off nearly 1,000 workers within months. Last fall, the firm bought the on-the-brink Blue Bird school bus manufacturer; earlier this month, Cerberus closed its Canadian bus plant and let go 130 workers. Cerberus bought a North Carolina textile company out of bankruptcy in 2004 and closed two mills within the year. It bought the Alamo and National car rental chains out of bankruptcy in 2004 and moved them from high-rent South Florida to more-affordable Tulsa.

Cerberus's sharp-toothed ways may be inspired by its namesake: Cerberus was the three-headed canine guardian of the gates of Hades in Greek mythology.

Cerberus the company maintains an even lower profile than its rivals, such as Providence Equity Partners, Blackstone Group and Washington's Carlyle Group. Cerberus has $25 billion under management and in funds and accounts. With just 200 of its own employees, Cerberus owns or has pieces of about 50 companies with more than 175,000 employees and a combined annual revenue of $60 billion, the company says....The firm is run by financier Stephen Feinberg, who was a trader at Drexel Burnham Lambert in the 1980s, when the firm popularized the use of "junk bonds" for corporate takeovers. Former Treasury secretary John W. Snow was named chairman of Cerberus in October. Former vice president Dan Quayle is on the board.

Cerberus distinguishes itself from other private-equity firms by maintaining a staff of in-house operations executives. Meaning: When it takes over a company, it often doesn't have to recruit a new chief executive; it puts one of its own in place.

....Cerberus bought 51 percent of GMAC, General Motors' financing unit, last year, and it owns auto parts maker Peguform Group in Germany and is trying to buy into troubled parts maker Delphi. Now, the buyout firm is set to add an entire automaker to its portfolio.


Staff writer Thomas Heath contributed to this report.

[liberal N proud]

1. The more I learn who is behind Cerberus the worse I feel about this deal

I have driven Chrysler's forever, only one car was not a Chrysler or Jeep.
I always like the styling of the cars.
I am getting ready to purchase a new vehicle in the next year, and I just don't know if I can buy from a company where some of these people are major investors.

[Demeter]

2. Well, Daimler Got Nothing Out of This

It's Official: Chrysler Sold (Sort Of)

An affiliate of private equity firm Cerberus Capital Management, L.P., New York, will make a capital contribution of $7.4 billion in return for an 80.1% equity interest in the future new company, Chrysler Holding LLC. DaimlerChrysler will hold a 19.9% equity interest in the new company. Chrysler Holding LLC will hold 100% each of the future Chrysler Corporation LLC, which produces and sells Chrysler, Dodge and Jeep® vehicles, and the future Chrysler Financial Services LLC, which provides financial services for these vehicles in the NAFTA region, according to DaimlerChrysler AG.

In fact, Cerberus is putting $5 billion into the Chrysler--which Daimler won't see a penny of. And another $1.05 billion goes into the financial business; again, Daimler won't see a penny.

Daimler does state it will get $1.35 billion, but then it loans Chrysler $400 million. Further Daimler states that the deal will give rise to a capital outflow of $1.6 billion.

In other words, Cerberus is infusing most of the $7.4 billion into Chrysler and Daimler only gets a stub equity position of 19.9% in Chrysler--no net cash.
posted by Raymond Weber @ 10:37 AM

http://www.economicpolicymonitor.com/

[Demeter]

3. My Sis Says Cerberus Put Her Company Out of Business

(AD Little) by lending them so much money they went bankrupt. This was decades ago!

[Pab Sungenis]

4. You know who runs Cerberus, don't you?