GO
Loading...

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.

Symbol
Price
 
Change
%Change
JPM MLP ETN
---
DAI
---

Featured

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Don't Miss

U.S. Video

  • CNBC's John Harwood speaks to Rep. Paul Ryan (R-Wis.), about his efforts to pass reform bills and the president's willingness to tackle tough fiscal issues. Ryan says Harry Reid is preventing President Obama from making difficult decisions.

  • Herbalife sells nutrition supplements but continues to be the target of Bill Ackman, as he alleges that the company is actually a pyramid scheme.

  • Argentina has defaulted on its debt. CNBC's Kate Kelly reports the ISDA has received a request to make a ruling on whether a credit event has occurred in Argentine Republic.