Cerberus Buyout of Chrysler Expected To Close Friday
A historic deal that places Chrysler Group in the hands of private equity firm Cerberus Capital Management was expected to close Friday, according to a Chrysler official who asked not to be named because the deal was not yet completed.
The $7.4 billion deal was announced in May. Under the terms, DaimlerChrysler AG will transfer an 80.1% stake in Chrysler to New York-based Cerberus. Daimler will retain a 19.9% interest in the company.
A message seeking comment was left for Cerberus spokesman Peter Duda.
Former Chrysler executive Wolfgang Bernhard, a senior adviser to Cerberus, is expected to be named chairman of the automaker's board of directors, while Chrysler Chief Executive Tom LaSorda would continue to run the company's day-to-day operations.
Although Bernhard has been seen frequently on Chrysler's headquarters campus in Auburn Hills, Cerberus Chairman John Snow has said Cerberus plans to keep the same management team in place and give it the freedom to implement its restructuring plan.
The closing was sidetracked last month when bankers marketing a $12 billion Chrysler debt sale to major institutional investors ran into turmoil in the mortgage industry that weakened demand for leveraged loans and high-yield debt.
With no investor appetite, seven banks led by JPMorgan Chase had to keep most of the debt on their books. The banks will front about $10 billion as a loan, while Cerberus and DaimlerChrysler will be on the hook to fund the other $2 billion.
Daimler bought Chrysler in 1998 in a $36 billion deal.