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Cerberus could gain in Chrysler stake give-away

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Joanne98 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 01:12 PM
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Cerberus could gain in Chrysler stake give-away

NEW YORK (Reuters) - Less than two years after paying more than $7 billion to take control of Chrysler, Cerberus Capital Management agreed to give away more than a third of the struggling automaker to Italy's Fiat without any cash in return.

Despite the desperate terms of the swap, analysts said Cerberus could still emerge a winner by moving closer to an exit strategy for its troubled investment in the struggling U.S. automaker.

The private equity firm, which owns an 80.1 percent stake in Chrysler, would give Italy's Fiat a 35 percent share in Chrysler in exchange for access to Fiat's small car technology and overseas markets.

The stark terms of the cash-free deal with Fiat would leave Cerberus with a diminished stake in an automaker still facing an uncertain future and an alliance that will almost certainly force it to yield some operational control, analysts said.

But Cerberus could still look to limit its losses after clinching a U.S. government rescue for Chrysler's automaking operations and its affiliated finance arm, Chrysler Financial.

http://www.reuters.com/article/innovationNews/idUSTRE50...
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Taverner Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 01:14 PM
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1. Aw man I thought you were talking about this guy...
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Joanne98 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 01:21 PM
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2. No I was talking about this guy

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leveymg Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 01:25 PM
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3. Bank Leumi must have taken a big hit with the Cerberus-Chrysler gamble
Even with the $4 billion in TARP funds, I think it was a bad bet for Cerberus Cap Mgmt and the vulture capital firm's backers.
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Joanne98 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 01:29 PM
Response to Reply #3
4. True. i for for the auto bailout but not for Chrysler.
TARP "bait and switch" to private equity. Expect more of that to come!
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leveymg Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 01:38 PM
Response to Reply #4
5. Chrysler Financial will seek another $4 B.
I for one am in favor of well-fed dogs, but not that one.



Also think the GM bailout needs re-engineering.
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Joanne98 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 06:05 PM
Response to Reply #5
6. LOL! the GM bailout does need some changes, but making the union
lower their wages to the transplants level is an outrage. I think that transferring the retirees healthcare to a government program would be better as far as cutting costs go. Medicare's administration cost is so much lower.. I think it's something like 3% compared to private insurance which runs around 27%. I don't have a problem with transferring that.
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