How Stupid Does Cerberus Think We Are?

Robert Farago
by Robert Farago
how stupid does cerberus think we are

Cerberus is the highly secretive private equity company that owns Chrysler, the ailing American automaker that just scored $4b from the Troubled Asset Relief Program (TARP). Cerberus also owns 51 percent of lender GMAC (soon to be less) and all of Chrysler Financial Services. And a lot of Burger Kings. Anyway, The New York Daily News reports today that “Cerberus says it will invest the first $2 billion of Chrysler Financial profits back into the financing arm’s parent automaker.” WHAT PROFITS? This horseshit comes hard on the heels of Cerberus pledge not to take any profit on Uncle Sam’s forthcoming $4b “investment” in Chrysler. WHAT PROFIT? CEO “Boot ’em Bob” Bob Nardelli and his golden parachuted pals want us to believe that Chrysler is determined to become a profitable automaker. Is there anyone who actually believes that? FYI, make the jump for Cerberus’ reason why Uncle Sam must boldy go where the equity firm fears to tread.

From The Wall Street Journal’s Deal Journal, Dec. 17:

Cerberus has invested all it is allowed to in Chrysler: The $27 billion Cerberus manages isn’t cash on hand. Cerberus’s charter maintains that the firm can’t put more than 5% of its assets into any one investment; to buy Chrysler in the first place, Cerberus had to seek permission from its limited partners to bend the rules of the charter. To inject more money into Chrysler, Cerberus would have to again seek permission. And the chances are slim that the LPs would agree to invest–and potentially lose–another batch of money on an auto maker so close to bankruptcy precipice that it has hired bankruptcy advisers. Cerberus’s LPs know what everyone else knows: that the financial tsunami of the past few months has wiped even more of the value from auto makers than would otherwise be the case in an economic downturn. ‘The timing of the investment was unfortunate,’ this person said, and Cerberus ‘can’t recover.'”

Says who?

Join the conversation
2 of 10 comments
  • Dilbert Dilbert on Dec 25, 2008

    Well, a billion here, a billion there, and pretty soon, we are talking real money.

  • Sajeev Mehta Sajeev Mehta on Dec 25, 2008
    Pch101 : We all know that GMAC isn’t turning a profit. You can’t possibly think that Chrysler Financial is likely making a profit from financing the sale of Chrysler vehicles if the dealers can’t move them and customers aren’t buying them. Pretty much my thinking too. Not to mention the chatter (and action?) on bringing back the Sales Bank, and the current shutdown at all Chrysler factories. It all spells doom for Chrysler Financial, and its pretty hard to believe anything Cerberus says about their secretive basket-swapping.

  • Jay Mason Your outdoor space will get better every year with a pergola. A horizontal, pole-supported framework for climbing plants is called a pergola. It creates a closed off area. pergola builder denton texas by Denton Custom Decks provide cover for outdoor gatherings. They would be more than happy to assist you with the pergola's framework.
  • Alan I would think Ford would beef up the drive line considering the torque increase, horse power isn't a factor here. I looked at a Harrop supercharger for my vehicle. Harrop offered two stages of performance. The first was a paltry 100hp to the wheels (12 000AUD)and the second was 250hp to the wheels ($20 000 (engine didn't rev harder so torque was significantly increased)). The Stage One had no drive line changes, but the Stage Two had drive line modifications. My vehicle weighs roughly the same as a full size pickup and the 400'ish hp I have is sufficient, I had little use for another 100 let alone 250hp. I couldn't see much difference in the actual supercharger setup other than a ratio change for the drive of the supercharger, so that extra $8 000 went into the drive line.
  • ToolGuy Question: F-150 FP700 ( Bronze or Black) supercharger kit is legal in 50 states, while the Mustang supercharger kit is banned in California -- why??
  • ToolGuy Last picture: Labeling the accelerator as "play" and the brake pedal as "pause" might be cute, but it feels wrong. It feels wrong because it is wrong, and it is wrong because Calculus.Sidebar: I have some in-laws who engage the accelerator and brake on a binary on/off all-in basis. So annoying as a passenger.Drive smoothly out there. 🙂
  • Johnny ringo It's an interesting vehicle, I'd like to see VW offer the two row Buzz in the states also.