Cerberus Slips Out As GMAC Gets Bailout

As spokesmen from Cerberus decline comment on their failed investment in GMAC, the recent bailout has them looking to the back door to slip out.

Two years ago it was unknown to Cerberus Capital Management that their purchase of 51-percent stake in GMAC would stand on the brink of bankruptcy. But, with the Fed’s forcing conditions upon Cerberus, this offers an easy out for the privately owned company.

As there were talks of a possible merger between General Motors and Chrysler, which Cerberus owns majority stake, now the option appears to be off the table.

One condition placed before Cerberus by the Fed’s was that they would reduce their 51 percent stake in GMAC to 33 percent of total equity and 14.9 percent of the voting shares. Also, co-investors of Cerberus would take control of their own holdings with GMAC instead of through Cerberus’ fund.

Reuters states:

“It’s a good thing for GMAC – it literally throws GMAC a lifeline,” said David Kukla, chief investment strategist on Mainstay Capital Management LLC. “So in that regard it’s good for Cerberus and good for GM. They are stakeholders. GMAC desperately needed capital.”

According to someone with direct knowledge who is not authorized to talk publicly, says that the timetable and more details on the transfer will be provided early next year.

Leave a reply

Don't forget to check out the recent podcast and subscribe! Stay alert and follow to know the moment the show is LIVE.

Disclosure of Material Connection: Some of the links found on this website are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my listeners and readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”