Cerberus Capital Management has denied reports claiming it has sold the majority of its equity in two of its highest-profile portfolio companies—Chrysler and GMAC.
The Stephen Feinberg-led buyout group, based in New York, issued a statement earlier today saying that it had “not reduced or made any changes to its equity stakes” in either the automobile maker or financing provider. It follows a report in the Financial Times that said Cerberus had sold “significantly” more than half its equity to roughly 90 investors, although the report was unclear as to when the those sell-offs took place.
At issue is whether Cerberus, which manages more than $27 billion (€17.5 billion) in assets, had syndicated equity in addition to the original co-investments made by limited partners and outside investors. The report named Avenue Capital, Cyrus Capital Partners, Oak Hill Capital Partners, Satellite Capital, Seneca Capital and York Capital as some of the more notable alternatives firms involved in the equity sell-off.
Cerberus declined to comment beyond the statement.
In its statement, the firm also sought to mitigate reports that most of the co-investors in the GMAC deal did not have sufficient time to conduct due diligence, saying “some co-investors, for their own reasons, determined to restrict their due diligence to unrestricted information only.”
This is not the first media controversy Cerberus has been forced to deal with this year. Early last month, Cerberus abruptly walked away from talks with controversial security contractor Blackwater after reports surfaced that Cerberus had been in negotiations to acquire the company.
Cerberus acquired Detroit-based Chrysler for $7.4 billion last July in one of the highest-profile private equity deals to date. The fate of the Chrysler deal has come under intense scrutiny as the US automotive market continues to shrink amid declining consumer spending and a weakening economy.
In 2006, a Cerberus-led consortium purchased GMAC for $14 billion, with $6 billion coming from the New York-based firm’s own funds. The mortgage and auto lender, formerly the financing wing of General Motors, has been severely hit by the subprime mortgage crisis and general credit market turbulence.
In related news Residential Capital, GMAC’s primary mortgage lending affiliate, said GMAC and Cerberus have agreed to meet a $1.43 billion shortfall confronting the company, according to a spokeswoman.