The silver lining for Cerberus

The failure of Chrysler is a big deal, but it leaves the private equity firm with a finance arm to blend with and strengthen its GMAC operation.

NEW YORK (Fortune) -- As Chrysler heads to bankruptcy court today in New York City, it becomes the highest profile failure for the private equity industry and its former owner Cerberus. But there is a slender silver lining for the New York money men.

As part of the automaker's decision to file for Chapter 11 bankruptcy protection, Cerberus will retain the assets of Chrysler Financial, the auto financing arm. It will work through the existing portfolio, which will hopefully generate a modest income stream as the loans come to maturity.

More importantly for Cerberus and its investors, Chrysler Financial's future business will be folded into GMAC, the auto finance company that the private equity firm bought from GM in 2006.

"GMAC and Chrysler Financial are effectively being merged," says David Whiston, an analyst who covers GM for Morningstar. "This could be a very profitable endeavor for Cerberus if they continue to have a stake in GMAC."

http://money.cnn.com/2009/05/01/news/companies/cerberus.chrysler.fortune/index.htm

Chrysler should have been let to die a long time ago


BTW, Chrysler could ne purchased by the UAW for about a buck
if they wanted it.

http://en.wikipedia.org/wiki/Cerberus_Capital_Management

Let's keep an eye on these guys.

Interesting that Cerberus is now getting Chrysler Financial. A few days ago, CNN reported the gov't said Cerberus would get "nothing."

a little like watching your Mercedes roll down a hill, and just before it plunges off a cliff, it hits a tree that knocks the hood ornament off, for you to add to your bling collection around your neck.

It does reflect the fact that one can make more money lending money, than from making automobiles these days.