By on January 24, 2009

One of the most ridiculous aspects of the Chrysler bridge to nowhere $7b bailout buffet: we still don’t know who owns the ailing American automaker. Yes, it’s Cerberus Capital Management, a company with its fingers in many pies, from guns (Remington) to paper (NewPage Corporation) to a chain of TV stations (Four Points Media Group) to bad loans (GMAC). That’s disturbing enough– given that the federal government is shoring-up a deep-pocketed, privately-held company. Worse (again): we don’t know the identity of “about 100 co-investors” who anted-up when Cerberus bought the domestic automaker from Daimler. Anyone remember Cerberus’ official response to Senator Corker’s question: why don’t you use your own money to bailout ChryCo? “No one is asking General Motors and Ford to pour their money in, and Cerberus has the same shareholders as they do— retirees, pension plans and endowments.” Yeah really? Who are they? Whose investments are we protecting? So I called Cerberus.

I asked Cerberus Spokesman Peter Duda straight up: can he provide a list of the investors who own Chrysler? His answer was equally direct: “No. We don’t release that information.”

Why? After all, we know the investors in many other Cerberus businesses. Duda stonewalled. I asked him if the information blackout was Cerberus’ decision or did the investment group have a contractual obligation with these investors to maintain confidentiality? Duda promised to look into the matter for us.

And here’s the kicker. 

When I pressed Duda on the public’s right to know who owned Chrysler– as Uncle Sam had provided the company with a $4b loan– Duda said “If the government asked for the information, we’d provide it.” So had they? “Not to my knowledge.”

If the U.S. Treasury Department has this information, why haven’t they released it? If they don’t have it, why haven’t they demanded it?  

Anyone who shares my concern in this matter, should email their Senator and ask them to contact the Treasury Department with a very simple question: who owns Chrysler?

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37 Comments on “Who Owns Chrysler?...”


  • avatar

    Well, if the Fiat deal goes through, we’ll know who owns a good chunk of Chrysler. Daimler already owns 19.9%. With Fiat taking a 35% equity share that could mean that Cerberus will be a minority owner depending how the deal is structured.

  • avatar
    DanM

    With or without Fiat, Cerberus needs to come clean with it’s investor list. If there’s a contractual confidentiality commitment, they could at tleast release the types of investors. i.e. XX pension companies, YY US private individuals, ZZ Foreign nationals, etc. Any material ownership of Ford/GM must be disclosed to the SEC; Chrysler needs to abide by the same disclosure laws as a public company if it wants a seat at the same bailout table.

    Dan.

  • avatar
    Usta Bee

    Only The Shadow knows….

  • avatar
    tesla deathwatcher

    Good investigative journalism. And interesting results.

    But I’m not so sure that having the list of 100 co-investors would be helpful. Making that list public might do more harm than good.

    I know for example that the two big California public employee pension funds, CalPERS and CalSTRS, will often co-invest in deals like this. But only with some of their money, that is targeted to high-risk investments. If they lose money in an investment like Chrysler, they may face a lot of criticism from people who do not realize that high-risk investments are an important part of an investment portfolio.

    Just me, maybe, but I don’t care who the co-investors are. I still think the government bailout of Chrysler was a travesty for the taxpayer. Just the last shameful act of a Bush administration that was either corrupt, incompetent, or both.

  • avatar

    Wow. So, who am I more ashamed of here, our Government for not providing this information, or our ever diligent news agencies? Where are you Fox news? CNN? Damn you Blitzer!

    Sorry…

  • avatar
    Pig_Iron

    Isn’t Duda, Hungarian for bagpipe? Isn’t a bagpipe a windbag full hot air?

  • avatar
    tced2

    Wasn’t Senator Corker asking indirectly asking for the “100 co-investors” names? His questions aren’t laws but he was asking them why didn’t they pony up with more money.
    tinfoil hat time:
    And the “100 co-investors” could include characters Hugo Chavez or the head of Dubai. These guys would love to have more automobiles on the road to use more “product” from their countries.

  • avatar
    tesla deathwatcher

    I still don’t understand why you want to know who the 100 co-investors are. Does it matter?

  • avatar

    tesla deathwatcher :

    Because MY tax money is supporting these people.

  • avatar
    tesla deathwatcher

    But you don’t know who owns GM either.

  • avatar
    mtymsi

    To my way of thinking since Cerberus didn’t actually pay Daimler anything to become Chrysler’s owner but assumed the existing debt the true owners are those holding the debt and now the U.S. government. Since Daimler wrote down their remaining stake to zero I think Chrysler as an entity is essentially worthless.

    The alliance with Fiat giving them a 35% stake for zero investment would indicate this as well. Cerberus who doesn’t know the first thing about automobile manufacturing and realizes they made a mistake getting involved with Chrysler just want out. They have also said they are willing to give equity in the company to other entities. If there is any hope for Chrysler’s long term survival the sooner Cerberus is completely out of the picture the better. Really they are nothing more than a temporary caretaker that wishes they had never gotten involved.

  • avatar
    Dr Lemming

    Robert, have you tried contacting the Treasury Dept. and asking these questions? If the information is not currently available, is there a timeline for releasing it? If new bailout funds are made available, will more disclosure be required?

    I assume that the Obama administration is still filling a lot of higher-level management positions, so it is possible that the media relations folks may not have all of their ducks lined up. Nevertheless, a query seems worth a try. If you get stonewalled, it sure wouldn’t hurt to have on hand a quote from Obama about his commitment to transparency, particularly regarding bailout funding.

    Another alternative would be to contact the White House press office directly. That should be more fully staffed by now, I would think.

    Don’t assume you’ll get a big fat “no” until you do. Lack of transparency could severely undercut Obama’s policy agenda. He seems to understand this, at least at the conceptual level . . . but it may take pressure at the implementation level to get the goods.

  • avatar
    Airhen

    Haven’t the 100 investors pretty much lost a good percentage of their original investment the way that Diamler has? Seems to me that this bailout is as much to payback the UAW for their support of democrats. Come on, do we really expect Obama and the democrat controlled congress to do anything but keep sending money to Chrysler (and GM)?

  • avatar
    SpacemanSpiff

    “Because MY tax money is supporting these people.”

    I used to get all upset about “my” tax money doing this and my tax money doing that. But now I’ve realized that it’s not mine once it is stolen from me by force (if I don’t pay, people with guns eventually show up) and I’m learning to mellow out on the subject. Why would I expect a gang of bandits to do anything with my money the way I would want them to?

  • avatar
    tced2

    The owners of GM are the shareholders. The records of shareholders is available to government regulators. Of course, it’s a constantly changing list because there are trades of GM shares every business day. And it’s conceivably a big list because there are lots of shares…there are 600 million shares and about 12 million traded the other day. There are 781 institutional shareholders (pension funds, mutual funds, etc). John F. Smith (former chairman?) holds about 294,000 shares as an insider. Robert Lutz has about 81,000 shares. I guess a normal civilian could develop a pretty good list of the owners of GM.
    But we can’t get the names of those 100 undisclosed investors in Chrysler because it’s a private partnership not subject to normal public corporation disclosures.

  • avatar
    PeteMoran

    @ RF

    In Australia, a Parliamentary or Senatorial member has a strong ability to extract information like this. It’s a shame US Congresspersons and Senators are not empowered in a similar way.

    Perhaps you could contact Senator Corker’s office?

    (Lack of) Transparency will eventually be the key reason this whole auto bailout debacle collapses.

  • avatar
    MarkT

    Possibly the investors at Cerberus saw a way to parlay zero cost debt into, what is it so far, $4 billion in funding and more on the way? Look for them to siphon at least $15 billion before they vanish.

    That’s a screaming return in any market.

    In a different world the authorities would have left their carcasses hung from the walls warning other pirates they were not welcome. In ours, our elected authorities loot our treasury for them.

  • avatar
    tesla deathwatcher

    Remember what these 100 co-investors are. Cerberus is a private equity firm. It invests money that its investors give it. That money is what Cerberus used to buy Chrysler.

    But sometimes a private equity firm invites some of its investors to invest more money, some that is specifically targeted to one investment. I suspect that is what these 100 co-investors are. Cerberus investors that anted up more specifically to invest in Chrysler.

    Of course, Cerberus could have simply invited unrelated outside investors to co-invest. I doubt it, though. In any case, Cerberus is the main owner, and has control. Other investors are passive.

    As I’ve said, I don’t care who owns Chrysler. I think the carmaker bailout is bad business. It’s just pissing away billions for nothing. The owners of Chrysler (Cerberus, co-investors, and Daimler) and the owners of GM (shareholders) will get nothing in the end. Their companies are bankrupt, declared or not, and worthless.

    I’m sure others have a reason for wanting to know who owns Chrysler. But I just don’t see it. No matter who Chrysler’s owners are, there is no way I can see that the bailout makes sense other than paying billions to keep two zombie companies alive for a few more months for political convenience. To me that is shameful.

  • avatar
    tesla deathwatcher

    MarkT, how do you see Cerberus getting anything back for its investment? The money it put into the company is gone, used for operating expenses. Same for the bailout bucks from the government. That money will be gone soon, too.

    By my math, Cerberus takes a huge bath on Chrysler. Am I missing something?

  • avatar
    no_slushbox

    tesla deathwatcher:

    “But you don’t know who owns GM either.”

    Yes, we do:

    http://finance.yahoo.com/q/mh?s=GM

    We can even track their trading:

    http://finance.yahoo.com/q/it?s=GM

    As a public corporation there is a lot that we know about GM that we do not know about Chrysler. Now that Chrysler has become “public” in the worst possible sense it has forfeited its private equity right to secrecy.

    For example, when Pelosi says that not even Chrysler, the least viable, most empty of the Detroit automakers cannot fail, I would be very interested to know whether her state’s public pension funds have major holdings in Chrysler.

  • avatar
    jerry weber

    Here is the bottom line. If you or I are investing in any business, we would ask what is the future market and what would be the share our new business will be expected to have in it. Unlike the climate the last time chrysler was rescued in 1980, we now have a huge overabundance of auto building capacity in the US and the World.Since chrysler has lost most of their old business, they have to be considered a new company in the auto world. What is this new companies chance of success in the auto world?

  • avatar
    shaker

    Funny – you’d think that an entity that offers to invest in a ‘private’ company would have no access to a breakdown of the existing investors?

    Sure, I’ll invest with a group that I know nothing about!

    Seems to me that if I were to want to throw a billion (or a few) into a firm, I’d like to know if the three largest investors were Moe, Larry and Curley…

  • avatar
    GS650G

    I wonder if any politicians own a piece of this.

  • avatar
    mel23

    It’s very common for Congressional hearings to have few Senators/Reps show up. Attendance of the elected types is directly proportional to TV coverage; hence the unanimous, or nearly so, showing for the bailout shindig. If Corker, or any other Senators, were interested in protecting the public, these questions would have been asked prior to, and the info presented at the hearing.

    A little research into Corker’s background indicates some self dealing around the time he was mayor of Chattanooga as well as his not-so-blind trust to hold his wealth while in office. He fits in well at the senate. Not likely that we’ll see any info the likes discussed here from the world’s greatest deliberative body.

  • avatar
    BuzzDog

    It’s easy to see why posters are asking for the names of the ~100 investors in Chrysler, LLC. Exposure to sunlight is well established as an effective disinfectant of moldy furniture, malaised balance sheets and infected public policy.

    Full and open disclosure may be painful for those the secrecy is trying to protect, but the overall benefit for the economy usually dwarfs the individuals’ benefits.

    Too bad we live in a time where actions for the greater good are usually seen as weak, unprofitable, or worst, socialist. And thank God that was not the prevailing mindset in the U.S. during World War II.

  • avatar
    carlos.negros

    We may not know who owns Cerberus, but we can speculate. My guess is that it is owned by the Bin Laden family.

  • avatar
    tesla deathwatcher

    Still seems to me that Chrysler’s ownership is as important an issue as the fact that the heads of the Big Three first flew to Washington, DC in private jets. Emotionally important. Logically pretty irrelevant.

    That’s because I don’t see the owners of Chrysler or GM ever getting anything, bailouts or not. The bailout keeps the companies operating. But the money is being spent. It’s not going into the owner’s pockets, or being spent on anything that makes their companies more valuable. The owners of Chrysler and GM will get nothing unless those companies become profitable again, and that seems as likely as the Detroit Lions winning the Super Bowl next year.

    I’m oversimplifying a complex issue here, so I can understand that others disagree. But for me, the important issue is not who owns Chrysler. The question is, why did we put up taxpayer money to pay the operating expenses of the carmakers? And will we put up more?

    The only answer I can see is that the Bush administration wanted to buy time. But if so, what an expensive two months.

  • avatar
    timd38

    Lets start with John Snow, former treasury secretary and Dan Quayle, former VP.

  • avatar
    picard234

    If memory serves, Cerberus got Chrysler for $7 billion. If that was ponied up by roughly 100 investors, they’re each in for $70 million.

    If Chrysler needs another $3 billion in “loans” then it seems to me those investors should cough up $30 million each to protect their investment. Then they should bring a guillotine to Auburn Hills and set it up outside Nardelli’s office for motivation.

    Am I being overly simplistic?

  • avatar
    philipwitak

    re: “By my math, Cerberus takes a huge bath on Chrysler. Am I missing something?”
    tesla deathwatcher / January 24th, 2009 at 10:10 pm

    so do the taxpayers, which gives us a valid reason for wondering who they are.

    seems to me that a freedom-of-information-act request might resolve this mystery, if the government actually has the information in its possession, since obama took such a strong public stand in reversing the bush administration’s default position on providing this sort of access, just last week, during his first full day in office.

  • avatar
    tesla deathwatcher

    Picard234, Cerberus was the lead investor in Chrysler, and seems to have put up the bulk of the money. The 100 co-investors are those who invested alongside Cerberus. Typically, they would be Cerberus investors who decided to put more into this specific investment. But they might also be independent investors who Cerberus let into the deal.

    It is not unreasonable to expect Cerberus and its co-investors to invest more money to try and save Chrysler. But they have said they will not. And no one can force them to.

    In my view, their “no” answer is the only smart answer. I wouldn’t invest any more money in Chrysler either. It’s a money pit. Any money poured into it would vanish without a trace.

    GM’s owners have given the same answer that Chrysler’s did. GM did not even bother to float new shares. No one would buy them. And no one could force them to.

    From what I could see, the politicians in Washington, DC understood this. They knew the owners of, and lenders to, GM and Chrysler had said no more. They had left the companies to die. The United States government was the only hope.

    But why did the government chose to step in? As near as I can tell, the Bush administration did not step in to save the GM shareholders or Chrysler’s owners. It stepped in to keep the companies going. To save jobs (for now). To keep GM and Chrysler from a “disorderly bankruptcy” at a politically inopportune time.

    In other words, we taxpayers paid $14 billion to keep alive for two months two companies whose owners had left for dead. I guess someone sees the sense in that. I don’t.

    I may be wrong, of course. In this case, I would love to be wrong. And time will soon tell.

  • avatar
    picard234

    tesla deathwatcher,

    Thanks for helping clarify that…I thought that Cerberus was basically a collection of investors, not necessarily a separate entity from this mysterious group of 100.

    I really hope you are wrong, too. Sadly, I have a feeling that you aren’t. What a shame that good, hardworking folks (engineers, suppliers, assembly line workers) will suffer because of these greedy money-grubbing bastards. Maybe that’s what was going through Bush’s mind.

    Still, Jim Press said today that Chrysler will be viable “by spring!” I can’t wait to see what he’s got up his sleeve.

  • avatar
    tesla deathwatcher

    Just a final comment to clarify. Farago’s article this time focuses on the co-investors. Apparently there are 100 of those. There are also the investors in Cerberus, which we know nothing about. That’s probably the more important information. I’m sure Farago and others want to see both lists — a list of investors in Cerberus and a list of Cerberus’s co-investors in Chrysler.

    Certainly Cerberus is somewhat shady. It has almost no real information on its website. Its chairman, John Snow, was not shy about lobbying his successor as Treasury Secretary, Hank Paulson, on Cerberus’s behalf. Lots of lobbying has been going on behind the scenes for months.

    And although Cerberus is not known as a so-called vulture fund, it has been operating rather like one. Its investments in Chrysler and GMAC rather look like a vulture wanting to feast off a dead company rather than one prepared to invest in the company to keep it alive.

    Something like the approach Michael Douglas’s character Gordon (“greed is good”) Gecko so famously took in the movie Wall Street. That is, as you say, “greedy money-grabbing bastards” with no concern for the “good, hardworking folks (engineers, suppliers, assembly line workers)” that Martin Sheen’s character Carl Fox, and eventually Charlie Sheen’s character Bud Fox, are out to protect.

    Real life is more complicated than the movies. I don’t know if Cerberus is a villain here. I doubt it. That’s why I don’t think any lists of investors will tell us anything.

    But like you, I hope that Jim Press and others can pull off a miracle.

  • avatar
    snafu

    fyi . . . who owns FN Chrysler who, who, lets ask Mr. Owl. Mr. Owl, how many bucks does it take to get to the . . .

    Sherrod Brown to me
    show details Jan 24 (1 day ago) Reply

    “Thank you for sending me your comments. They have been recorded and will be reviewed by my staff. We endeavor to send everyone an individual response, but this is not possible in every case. If you have any immediate questions, please feel free to contact any of my offices via phone”.

  • avatar
    Kurt.

    I agree with the sentiments of tesla deathwatcher but also SpacemanSpiff. SpacemanSpiff points out that once my tax money is taken away from me, I have no say in how its spent. It’s now the governments money to do as it sees fit. Only existing laws protect my “investment” in the US government.

    tesla deathwatcher points out that it doesn’t matter who Cerebus is. If you found out Joe Plumber was involved, you couldn’t go to him as force him to invest further in Chryco – or give the gov’t its “investment” back.

    One thing I’d like to point out. Since the beginning, we are really dealing with 4 companies; GM, Chryco, GMAC, and Chrylser Financing. Cerebus is (was) the major share holder in 3 of the 4. See a problem here? Not to throw wild conspiracies around but John Snow, voice of Cerebus, was Treasury Secretary. X-VP Quayle is a known member. Where I disagree that having a list of Cerebus share holders is irrelevant, I think having one would open a lot of windows into Public figures in Washington and elsewhere.

  • avatar
    RetardedSparks

    I have been saying all along that Chrysler and GM should not be lumped together and treated the same. There is a difference between GM which CANNOT get money, and Cerberus, which CHOOSES not to contribute more.
    I guess one could argue that GM’s Board and top 100 executives could be forced to buy $13B of GM stock…
    In any case, Congress could have made the CRAP (Congressional Recapitalization of Automakers Program) money contingent on disclosure, but chose not to. Just like they missed the chance to put any conditions whatsoever on the TARP money.

  • avatar
    Byron

    For Cerebus to reference “retirees, pension plans and endowments” as investors infers these good people should be held exempt from poor investment decisions by Cerebus. Investments are about risk, not all work out no matter where you are ranked in the stairway to heaven.
    This is an example of the kind of problems when government intercedes in a commercial process. Money is cheapened and is spend inefficiently, goes into areas that may not be in the best interests of taxpayers and is largely unaccounted for.
    It is a pull at the heart strings to reference retirees et. al., and while it would be interesting to know who the investors are, other than to catch Cerebus in a lie it is not crucial information. Key is where the money is going and why.


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