Word: cerberus
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...Cerberus LLC, the once powerful private equity firm, swept into Detroit in the autumn of 2006 to acquire a 51% stake in GMAC, General Motors' financial arm, and less than a year later it drove off with Chrysler, described at the time as the "capstone" of Cerberus' industrial empire. Never mind that the seller, Daimler, was only too happy to get rid of the auto company...
...Today, Cerberus is backing out of those arrangements, ceding some control of its Detroit institutions in return for rich infusions of government aid. The first infusion came on December 19th when President Bush announced that Chrysler, along with GM, would receive $13.4 billion of emergency loans from the Troubled Asset Relief Program (TARP) after Congress had refused to pass a separate bailout bill. On Christmas Eve Cerberus got another last-minute gift when the Federal Reserve Board voted to permit GMAC to change its status to a bank holding company. (GM still owns 49% of GMAC). (See pictures...
...Detroit Three, in fact, may have to shrink to two. Chrysler, which burned through $3 billion in cash in its last quarter and has $6.1 billion left, is looking for more partners like Nissan, which is already contracted to build a small car for the company. Chrysler's owner - Cerberus Capital Management, a New York City private-equity firm - got a lemon when it bought 80% of the company from Daimler for $7.2 billion last year. A merger could...
...Chrysler is a bit of a mystery. CEO Robert Nardelli has been somewhat scant on details for new products other than announcing an electric-vehicle platform that has so far not impressed anybody. No one would be surprised if Cerberus, Chrysler's owner, announced some kind of partnership or merger before the year...
...executives have been highly resistant to Cerberus' demands for a larger management role in the merged company. "I thought this was supposed to be an acquisition," said one senior GM official. "There haven't been any discussions about governance. Why would Rick Wagoner negotiate himself...