Cerberus commits $200m to Chrysler pension fund

Cerberus has moved to address union concerns over its buyout of Chrysler, a US carmaker, by committing $200 million to plug its pension fund deficit.

Cerberus, the new private equity owner of Chrysler, will contribute $200 million (€147 million) to plug the carmaker’s pension fund deficit, as it looks to dispel union unrest following its $7.4 billion acquisition of the company this week.

The contributions will form part of the $5 billion that Cerberus has promised to make available to Chrysler, in order to secure the future of the company.

The United Automobile Worker’s Union, a US union, revealed that the carmaker’s former owner DaimlerChrysler has also provided a conditional guarantee of $1 billion over a five year period.

The New York Times speculated that the Daimler contribution was undertaken to protect the pension fund if Chrysler’s debt dropped lower than its former parent’s.

According to Canadian daily The Globe and Mail, Cerberus is also plotting a bid for BCE, Canada’s largest telecoms company. However, it is likely to face competition from Kohlberg Kravis Roberts and a consortium of Canadian pension funds.