By on June 14, 2016

2008 chrysler sebring

Famous for being a failed savior, a financial hound of Hades has come to the aid of Gawker Media and its many online publications.

Cerberus Capital Management L.P., the infamous private equity firm that produced headline gold — and not much else — after its ill-fated 2007 purchase of Chrysler, is now offering cash to another bankrupt company. The firm announced it will hand Gawker $22 million to keep the lights on while the media giant completes its bankruptcy proceedings and sell-off.

Gawker filed for Chapter 11 bankruptcy on June 10 after being ordered to pay $140 million in damages to former wrestler Hulk Hogan. The verdict followed a lawsuit that stemmed from Gawker’s airing of a sex tape of the former WWF star.

The Cerberus cash — offered as a loan, not a gift — allows Gawker to pay its employees, while also paying off its lender bank. Without it, the company would be forced to liquidate.

In 2007, Cerberus bought a controlling stake in DaimlerChrysler, which then spun-off Chrysler LLC. Within two years, the economy imploded and the automaker filed for bankruptcy, wiping out the firm’s 80-percent stake. Cerberus shuffled away as the federal government intervened to save the automaker.

Gawker has a buyer lined up — no, not Fiat — so the cash just has to tide the company over until media company Ziff Davis LLC plunks down $90 million in its ownership bid. (A July auction could see other players outbid Ziff Davis.)

For the sake of Gawker-owned automotive publication Jalopnik, let’s hope former Cerberus-installed Chrysler CEO (and Home Depot fan) Bob Nardelli doesn’t read this old column.

[Sources: Wall Street Journal, Reuters] [Image: Greg Gjerdingen/Flickr]

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41 Comments on “Jalopnik On Course to Receive Old Chrysler Money...”


  • avatar

    Cerberus must need a tax writeoff. Why would anyone invest in a company that makes such spectacularly bad decisions? I’m pretty sure Gawker would get laughed off the stage of Shark Tank.

  • avatar
    Joe Btfsplk

    Cerberus must feel that there are a few edible kernels in the steaming pile that is Gawker.

  • avatar
    Mike N.

    Debtor in possession financing is fairly safe (they get paid first) and quite lucrative.

  • avatar
    trecoolx

    Gawker must be salivating at the Fiat money they’ll get in a few years.

  • avatar
    bkrell

    Everyone at Jalopnik must be forced to drive a Crossfire as a daily driver until said loan is paid off.

  • avatar
    CoreyDL

    “after its ill-fated 2007 purchase of Chrysler”

    Ill-fated but brilliantly planned. Cerberus is a financial strip mining operation.

    • 0 avatar
      28-Cars-Later

      Cerberus, even with a crystal ball, could not have planned what actually happened. In fact IIRC they ended up only barely breaking even on the whole debacle.

      “The private equity firm Cerberus Capital Management will get back much of its troubled bet on the auto industry as a result of Tuesday’s sale of Chrysler Financial to Toronto-Dominion Bank for $6.3 billion.

      Toronto-Dominion will acquire about $5.9 billion in net assets and $400 million in good will from Chrysler Financial, the former financing arm of the carmaker. Cerberus will retain more than $900 million in Chrysler Financial assets as part of the deal, according to people briefed on the matter who agreed to speak only on the condition of anonymity.

      The sale will help Cerberus earn back much of the $7.4 billion it paid for an 80 percent stake in Chrysler three years ago, part of the buyout firm’s wager that the auto industry would recover. (In 2006, Cerberus also bought a majority stake in GMAC, General Motors’ financing arm, for $7.4 billion.)”

      http://dealbook.nytimes.com/2010/12/21/cerberus-recouping-costs-will-sell-chrysler-financial/?_r=0

      • 0 avatar
        Detroit-Iron

        “Barely breaking even” >> losing everything

      • 0 avatar
        CoreyDL

        That tells you something – even with a financial disaster in the midst of their plans, they still broke even.

        • 0 avatar
          28-Cars-Later

          Cerberus was always after Chrysler Financial and never wanted the rest of the carcass. Daimler forced them to take it all off of their hands, and Cerberus probably would have either sold off or declared Chapter 7 to liquidate the automotive assets at some point after 2007.

          • 0 avatar
            CoreyDL

            So do we suspect Gawker will default on the loan and be chopped to bits by Cerberus?

          • 0 avatar
            Pch101

            Cerberus’ plan was to produce trucks for itself and third parties while it outsourced car production.

            Cerberus bought a distressed asset, so its investment was relatively modest; it didn’t lose much because it didn’t pay much. Daimler absorbed most of the cost of the company’s decline.

          • 0 avatar
            28-Cars-Later

            I’m not knowledgeable on this subject but I believe if Gawker could not be sold, then its assets would be given to the creditor. I imagine Cerberus has a higher valuation of Gawker than the amount of the loan so then Cerberus profits on a break up.

          • 0 avatar
            Pch101

            Cerberus is acting as a DIP lender. As a DIP lender, its loan takes priority over the pre-bankruptcy debts.

            When Ziff Davis or some other party buys Gawker’s assets, Cerberus will be repaid from the proceeds. The value of the assets that would be sold are well in excess of the amount of Cerberus’ loan, so the risk to Cerberus is quite low in today’s economy. (In addition to a major publisher being interested, there may be other buyers that could bid up the price further.)

            The bankruptcy will address the pre-BK creditor claims with whatever is left. Ziff Davis will start with a clean balance sheet; given the nature of successor liability, it will leave the liabilities with the bankrupted seller.

          • 0 avatar
            28-Cars-Later

            Thanks for the explanation.

      • 0 avatar

        Cerebus has made a decent amount of decisions that ended up backfiring a decade or so later.

        Example: Remington / Freedom Group.

        http://www.nytimes.com/2015/05/16/business/dealbook/cerberus-unable-to-sell-remington-will-buy-back-its-shares-from-investors.html?_r=0

        Pretty sure the ACA bailed them out and made them a ton of cash with their Cariitas acquisition.

  • avatar
    Jagboi

    I’d much rather have the Jaguar XJ8 next to the Chrysler in the photo.

    • 0 avatar
      CoreyDL

      I was considering everything I could see in that photo – and none of it is very reliable, ha.

      Old Passat, old Discovery, old Jag, old E-Class.

      I think I’d pick the old E-Class if I had to choose one.

      • 0 avatar
        28-Cars-Later

        I think this is the lot on the Island of Misfit Cars.

      • 0 avatar
        NoGoYo

        E-Class? More like no class.

        Wonder if a LS engine fits in a Jag…

        • 0 avatar
          CoreyDL

          I’m not enamored with the XJ8 interior build quality, and by this age and [probs] high miles, I bet it’s ratty. And leaks water. With cracked walnut trims.

          The E likely has MB-Tex which will look brand new even if the former owner was a coffee salesman.

          • 0 avatar
            Jagboi

            Water leaks? I know a lot about Jaguars (own 5 different ones myself. Yes, they all run, and run well.) and I’m not aware of the X308 having water leaks.
            The walnut does crack because it’s real wood, and wood moves with temperature changes. Just one of the hazards of using a natural material.

            Jaguar uses an aluminium substrate, then 7 layers of poplar veneer with the grain alternating at each layer along with glue, then the walnut on top. Gets put in a press under heat and pressure and that’s how the wood conforms to the shape of the substrate.

            Jaguar has their own sawmill to make veneers, so if it looks like wood on a Jaguar, it is.

          • 0 avatar
            CoreyDL

            Are you in the UK? Just wondering. You have lots o’ Jag informos.

          • 0 avatar
            Jagboi

            Nope, Canada. Jaguar’s are my favourite cars though, toured the factories a few times. One of my best friends is one of Jaguar’s “Pro Drivers” for their media launches. Tough job having to drive an F Type around F1 tracks in Spain, but someone has to do it…

          • 0 avatar
            CoreyDL

            After I own all of the Lexus, and eventually get down to having Jaguar play cars I will seek counsel for buying!

        • 0 avatar
          28-Cars-Later

          It does!

          http://www.jaguarspecialties.com/xj8-lsx.asp

      • 0 avatar

        I’ll take the 2nd gen Explorer or whatever that white standard cab pickup is (probably a Chevy)

      • 0 avatar
        Maymar

        Old Passat? Even better, it’s a Peugeot 405! Since it’s clearly not in in Africa, it’s probably not benefiting from the weird Peugeot Twilight Zone sub-Equator reliability, and is definitely suffering from parts availability.

      • 0 avatar
        MRF 95 T-Bird

        Heck I would take the previous generation Sebring GTC convertible with the 2.7 and Auto stick (spell check says Autistic) over that bean counter Daimler Cerberus era one in the picture.

    • 0 avatar
      28-Cars-Later

      I would as well.

  • avatar
    HotPotato

    Ah, the company whose name literally means “the hound of Hades.” The company whose investments chairman is noted half-wit Dan Quayle. The company which decided Bob Nardelli, crowned by CNBC as America’s worst CEO, was just the guy to run Chrysler.

    Well, this should be good. *munches popcorn*


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