Cerberus volunteers to give back any profit made from Chrysler if they get gov money
Cerberus Capital Management LP, wading into the politics of a U.S. auto-industry bailout, would give up any profit on a future sale of Chrysler LLC should the company receive federal financial aid.
Chrysler also expects the U.S. government to take a stake in the company in any rescue, CEO Bob Nardelli said yesterday. Federal backing for a merger between Chrysler and General Motors Corp. was discussed before GM ended talks last week, people familiar with the matter said.
The no-profit pledge may help ease opposition in Congress to helping the industry, because Cerberus is a buyout firm. Cerberus founder Stephen Feinberg “has basically gone on record saying he would forfeit” profit from a sale under a bailout, Nardelli said at a conference in Palm Desert, California.
“This is a sign they need the money and are willing to do anything to get it,” said Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan. Taxpayers won’t want to let “a private-equity fund reap the profit,” he said.
Chrysler, which isn’t required to report financial results, has indicated it lost at least $1.08 billion in the first half. Cerberus acquired 80.1 percent of the automaker from Daimler AG in 2007 for a $7.4 billion investment, about a fifth of what the Germany company paid for Chrysler nine years earlier.
Source: Bloomberg
Tags: bailout, cerberus, government, nardelli