[...] "Over the next two years, according to shareholder lawsuits, Cerberus forced the company into bankruptcy by secretly buying up the bonds of companies WSNet hoped to acquire and forbidding WSNet executives from pursuing deals. Through bankruptcy proceedings, the fund tried to take control of the company, lawsuits contend. The suits also contend that Cerberus installed directors at WSNet who maximized Cerberus's profits at the expense of other stakeholders. The claims were settled for a relatively small amount [hmmm… does this imply that even though they settled, it wasn't really all that guilty?] in 2005, by which time Cerberus had recouped its initial investment in WSNet, according to the lawsuits."   See Abbruzzese, the Vultures and Bruno Article Below For More Details
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ASSET STRIP

US private equity firm poised to win battle for Chrysler (times)
Cerberus, the US private equity firm, is poised to acquire Chrysler, the ailing carmaker, in a multi-billion dollar deal, after a fierce three-way battle against Blackstone, the private equity firm, and Magna International, a Canadian car parts maker.

The finishing touches were being put last night to a complex deal, in which the financing of Chrysler's $18 billion (£9 billion) worth of healthcare and pensions liabilities will play a significant role.

Cerberus was also thought still to be working out exactly how to absorb Chrysler's car financing operations into GMAC Financial Services, the former General Motors unit it recently acquired.

A deal could be announced as soon as today, although sources gave warning last night that the talks could still collapse, paving the way for a rival bidder to steal the prize.

Chrysler lost $1.5 billion in 2006 and is undergoing a recovery plan that will cut 13,000 jobs in Canada and the US and pare back production. Daimler-Chrysler announced in February that it was considering all options for the unit, which was taken to mean that it was being put up for sale.

This month, Magna had been viewed as the frontrunner to buy Chrysler because of the close ties between its chairman, Frank Stronach, and Daimler-Chrysler, his perceived determination to be a major player in the industry and his firm's car industry expertise.

But Mr Stronach appeared to play down his interest last week, saying he would be content for Magna to be one of four or five members of a larger ownership consortium, rather than the driving force. A further question mark emerged over Magna last week as Mr Stronach sold a $1.5 billion stake in the company to Basic Elements, a private Russian conglomerate controlled by Oleg Deripaska, the 39-year-old Russian billionaire with close ties to President Putin.

The link with Mr Deripaska raised concerns that a deal between Magna and Chrysler could face opposition by the United Auto Workers trade union and possibly create regulatory issues.

For its part, Cerberus helped its chances of winning the auction by hiring Wolfgang Bernhard, the former chief operating officer of Chrysler, to lead its bid. Mr Bernhard held that position from 2001 to 2004, during which time he masterminded Chrysler's last comeback.

Mr Bernhard is working alongside Robert Rewey, a former marketing executive at Ford Motor, JD Power and Associates, a research firm with extensive knowledge of the car industry, and its senior vice-president, Gary Dilts, formerly head of Chrysler's sales team.

Like General Motors and Ford, Chrysler has suffered from the rising cost of petrol causing consumers to switch from SUVs and pickup trucks to smaller vehicles.

Toyota, which overtook Ford and Chrysler to become the world's second-biggest carmaker, last month revealed that it was now the biggest.

Cerberus's worldwide investments include businesses involved in aerospace and military equipment, cars, building products, retailing, financial services, health care, distribution, paper and packaging, property, telecoms, transport and travel.

Fintag says
Why would anyone want to buy a dsyfunctional car manufacturer? Well certainly not to turnaround as the Japanese like Toyota have spend 30 years building up an empire that is untouchable. The reason Chrysler is attractive are the assets that can be sold on - like most of its marques, its renewable energy cars it could never sell due to Government intervention and its real estate.

Chrysler is no more.

All Credit to: http://fintag.com/
_____________________________________________________________________________________ All credit to: http://www.stltoday.com/stltoday/business/stories.nsf/moneymarkets/story/C1C29B12AA03DB02862572DA00057E09?OpenDocument

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Secretive Cerberus quietly building financial empire

SILENT INFLUENCE: Although it avoids media attention, the investment firm has a hand in some of the world's best-known companies and hires political heavyweights

NY TIMES NEWS SERVICE, NEW YORK
Monday, Dec 25, 2006, Page 11

Coy Wyatt, foreground, clamps electrical lines under a bus being built for the Chicago Transit Authority in a North American Bus Industries factory in Wichita, Kansas on Aug. 21. North American Bus Industries, Inc of Anniston, Alabama, was acquired by Cerberus Capital Management, LLP in February and now manages funds and accounts with capital in excess of US$16 billion. PHOTO: AP

On the upper floors of a soaring Midtown Manhattan skyscraper, behind heavy glass doors that do not bear his name, sits Stephen Feinberg, one of the country's most powerful -- and anonymous -- financiers.

Over the last few years, Feinberg's US$24 billion investment fund, Cerberus Capital Management, named after the mythological three-headed dog that guards the gates of Hades, has quietly acquired some of the world's best-known companies. The car rental chains National and Alamo, as well as parts of Air Canada and the retailers Mervyn's and Albertson's, are now all within the Feinberg empire.

Last month Feinberg secured a majority stake in General Motors' financing arm, GMAC, thus gaining control of the seventh-largest financial institution in the US.

Army contractor

Through another company it controls, IAP Worldwide Services, Cerberus is poised to become one of the US Army's largest contractors in Iraq. Earlier this month, Cerberus and other funds offered to invest up to US$3.4 billion in Delphi Corp, the auto parts giant.

All told, Cerberus has a controlling interest in more than 45 companies that employ more than 250,000 people and generate US$50 billion in revenue each year, more than the sales of Microsoft, Motorola or PepsiCo. The fund has earned an average annual return of about 22 percent over the last seven years, according to its marketing materials, and Institutional Investor magazine estimated that Feinberg took home a US$75 million paycheck in 2004.

The executive ranks of Cerberus include former treasury secretary John Snow and former vice president Dan Quayle.

For all of that, however, very little is known about Cerberus beyond its intimidating name -- a reflection of how greatly Wall Street players like Feinberg value secrecy, and the pivotal role stealth plays in amassing and deploying the vast pools of capital that private equity investors control.

"Secrecy is very important to how takeover deals get done," said Henry Hu, a professor of corporate and securities law at the University of Texas at Austin.

"Secrecy gives you access to private information. It lets you bid on companies before the competition is aware they are for sale. Secrecy is part of how this industry works," he said.

THE DOWNSIDE

But secrecy also has its downside. Although many backers of Cerberus say Feinberg, 46, is known for his loyalty to investors and partners, his analytical savvy and creative takeover strategies -- the fund's tactics in the bare-knuckled and risky arena of debt investing -- have given Cerberus its share of bruises.

Court documents detail legal brawls in which investors accuse Cerberus of orchestrating secretive deals that transgressed legal and ethical boundaries, accusations the firm denies.

"These guys come from a different background than other buyout firms," said Joel Simon, a principal at XRoads, a financial advisory firm, when asked to describe how Cerberus operates. "When you play in the distressed arena, you develop sharp elbows. They have a reputation as tough negotiators who avoid public attention."

Cerberus has lost out on deals because of its secretive image, and it risks attracting the kind of regulatory scrutiny the takeover industry as a whole is trying to avoid.

So Cerberus is trying to change. In the spirit of greater openness, it recently built a Web site to give the public a sliver-sized glimpse of the firm. Along with high-profile hires of political heavyweights, Cerberus has become a major political donor. It has distanced itself from its roughneck roots by hiring dozens of image-improving blue-chip executives and, during the GMAC announcement, went so far as to let a senior manager appear at a press conference for the first time in the fund's history.

CAMERA SHY?

But don't ask for a photo of Feinberg, an interview with him or even a visit to the company's Park Avenue headquarters -- there are only so many shifts that Cerberus is willing to embrace. And the changes that Cerberus refuses to adopt speak to the struggles that many takeover groups confront as they try to establish an image as good corporate citizens rather than opportunists looking for a fast buck.

"The public wants to know who is buying up corporate America," said Felix Rohatyn, a well-regarded dean of Wall Street's investment banking industry. "It will be interesting to see how far those at the top are willing to pull back the veil."

The son of a World War II veteran, Feinberg founded Cerberus in 1992 with US$10 million, a plan to speculate in the debt of troubled public companies and a reputation for honest and tough negotiations. Distressed-debt investors get paid by shouldering aside other stakeholders and gambling that faltering companies can be rehabilitated.

Over the years, analysts and investors say, Cerberus excelled by gaining control of companies in bankruptcy smackdowns and developing restructuring plans that helped them become profitable.

The shift to takeover deals required Cerberus to develop a friendlier image that was more attractive to the boards of companies the firm hoped to acquire.

"When you sit down with a company's board, you want them to know who you are," said Brett Barth of BBR Partners, a money management firm that has invested with Cerberus. "Distressed debt is all about having a small piece of the pie and making it bigger at everyone else's expense. In private equity, you own the whole pie. You have to convince people you're focused on different things."

The investment fund began hiring well-known executives to introduce the firm to corporate boards. Today, it employs 140 nonfinancial professionals, including the former chairman of the Rite Aid Corp, a onetime special adviser to Ford Motor and dozens of other blue-chip executives.

"Preserving our reputation is vitally important to us," said Timothy Price, the senior operations manager of Cerberus. "We don't want anyone from a company we've bought calling another board and saying, `Stay away from these guys."'

To add a higher-profile sheen, Cerberus hired Snow and spent more than US$2.5 million with lobbying firms from 2003 to this year, according to federal records.

Those dollars were spent in part to discourage politicians from regulating private investment pools like Cerberus.

Feinberg personally donated more than US$100,000 to primarily Republican causes in the last three electoral cycles, according to federal filings.

Yet Cerberus still keeps a relatively tight lock on its doors.

transparency trend

While firms like Cerberus continue to eschew openness, some people say that greater transparency in the takeover world is not so easily avoided. They say it is crucial.

"When you take control of a major company, you have a real responsibility to the employees, to the customers, to the communities they live in, to the public," Rohatyn said. "The people who run enormous funds understand that responsibility. They understand if they don't introduce themselves, suspicion will grow."

But Feinberg's friends say he is a deeply private man who wants to avoid public fame.

"Why does someone have to become a public figure just because he's successful?" Price asked. "It's hard for any of us to take time away from our day-to-day jobs to talk to outsiders, and Steve is the last guy who can afford to spend time away from our portfolio companies. Why do we have to give up our privacy for everyone else?"

Published on Taipei Times
http://www.taipeitimes.com/News/worldbiz/archives/2006/12/25/2003341917
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List of American firms that assisted Iraq's WMD programme
[A - nuclear; K - chemical; B - biological; R - rockets (missiles)]


1. Honeywell (R,K)
2. Spektra Physics (K)
3. Semetex (R)
4. TI Coating (A,K)
5. UNISYS (A,K)
6. Sperry Corp. (R,K)
7. Tektronix (R,A)
8. Rockwell (K)
9. Leybold Vacuum Systems (A)
10. Finnigan-MAT-US (A)
11. Hewlett Packard (A.R,K)
12. Dupont (A)
13. Eastman Kodak (R)
14. American Type Culture Collection (B)
15. Alcolac International (C)
16. Consarc (A)
17. Carl Zeis -U.Ss (K)
18. Cerberus (LTD) (A)
19. Electronic Assiciates (R)
20. International Computer Systems
21. Bechtel (K)
22. EZ Logic Data Systems,Inc. (R)
23. Canberra Industries Inc. (A)
24. Axel Electronics Inc. (A)
-Die Tageszeitung (Berlin daily),18/12/02

The Pages Ripped out by the US


Baghdad's uncensored report to UN names Western companies alleged to have developed its weapons of mass destruction. Iraq's 11,000-page report to the UN Security Council lists 150 foreign companies, including some from America, Britain, Germany and France, which supported Saddam Hussein's weapons of mass destruction programme, a German newspaper said yesterday. Berlin's left-wing Die Tageszeitung newspaper said it had seen a copy of the original Iraqi dossier which was vetted for sensitive information by US officials before being handed to the five permanent Security Council members two weeks ago. An edited version was passed to the remaining 10 members of the Security Council last night. British officials said the list of companies appeared to be accurate. Eighty German firms and 24 US companies are reported to have supplied Iraq with equipment and know-how for its weapons programmes from 1975 onwards and in some cases support for Baghdad's conventional arms programme had continued until last year.

It is not known who leaked the report, but it could have come from Iraq. Baghdad is keen to embarrass the US and its allies by showing the close involvement of US, German, British and French firms in helping Iraq develop its weapons of mass destruction when the country was a bulwark against the much feared spread of Iranian revolutionary fervour to the Arab world.

"From about 1975 onwards, these companies are shown to have supplied entire complexes, building elements, basic materials and technical know-how for Saddam Hussein's programme to develop nuclear, chemical and biological weapons of mass destruction," the newspaper said. "They also supplied rockets and complete conventional weapons systems," it added. The five permanent members of the Security Council-the United States, Britain, Russia, France and China-have repeatedly opposed revealing the extent of foreign companies' involvement, although a mass of relevant information was collected by UN weapons inspectors who visited the country between 1991 and 1998. The UN claims that publishing the extent of the companies' involvement in Iraq would jeopardise necessary co-operation with such firms.
http://www.iranchamber.com/history/articles/iran_iraq_war_american_interest.php
and

http://www.taipeitimes.com/News/worldbiz/archives/2006/12/25/2003341917______________________________________________________________________________________

2 Former Treasury Chiefs Add Clout to Hedge Funds

By Lori Montgomery
Washington Post Staff Writer
Saturday, October 21, 2006; D01

Two former U.S. Treasury secretaries -- John W. Snow and Lawrence H. Summers -- have accepted positions with two of the nation's largest hedge funds at a time when federal officials are growing increasingly concerned about the impact of the private investment pools on U.S. financial markets.

Snow, 67, who resigned in May after three years with the Bush administration, will become chairman of Cerberus Capital Management LP, a $16.5 billion fund that contributes heavily to the Republican Party and counts former vice president Dan Quayle among its chief officers.

Summers, 51, who led the Treasury Department during the final years of the Clinton administration and until recently was president of Harvard University, will join D.E. Shaw & Co. as a part-time managing director. D.E. Shaw, a major Democratic Party contributor, manages $25 billion in assets and ranked as the nation's fourth-largest hedge fund in a recent survey by Absolute Return, a monthly magazine for the hedge-fund industry.

With the announcements Thursday, Snow and Summers join a long line of "highly ranked Treasury officials who have found gainful employment on Wall Street," said Kevin Hassett, director of economic policy studies and a resident scholar at the American Enterprise Institute.

"Part of the reason why they're so valuable is that they acquire the best address book you can imagine. They know the key financial players in every country on Earth," Hassett said, adding that the names Snow and Summers may also lend gravitas to their new employers and inspire confidence among investors.

Treasury officials also know all the players in Washington, where scrutiny of the hedge fund industry is on the upswing.

Federal ethics rules limit the extent to which Snow and Summers may lobby federal agencies, but do not prohibit them from lobbying Congress. Cerberus declined to make Snow available for an interview yesterday. The fund focuses on undervalued companies from a range of industries, including aerospace and defense.

Shaw identifies investments around the world using mathematical models. Summers said he has made it clear to the fund that he will do no lobbying.

But Michael Feiner, a management professor and ethics fellow at Columbia Graduate School of Business, said: "There's lobbying and then there's lobbying."

While influencing Washington may not be the chief reason Snow and Summers were hired, Feiner said, "it is inconceivable that either of these guys wouldn't pick up a call and try to head off the slowly burgeoning movement to get a better handle on these folks."

Earlier this year, Treasury officials began studying the impact of the $1.34 trillion hedge fund industry, which is exempt from many of the rules and regulations governing other mutual funds and free to pursue highly aggressive investment strategies. Those characteristics have contributed to the rapid growth of the funds, which attracted $44.5 billion in net new investments in the third quarter, a record inflow for the second quarter in a row, according to figures released yesterday by Hedge Fund Research Inc.

But the lack of regulation has also contributed to some spectacular failures, including the near-collapse of Long-Term Capital Management in 1998. Last week, Amaranth Advisors LLC announced that it plans to shut down by March after losing $6.6 billion on natural gas trading.

After the Amaranth debacle, Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) asked administration officials, including Treasury Secretary Henry M. Paulson Jr., to recommend ways to make hedge funds more transparent.

Securities and Exchange Commission Chairman Christopher Cox said Wednesday that his agency is increasing investigations of potential insider trading by hedge fund managers.

All credit to the Washington Post at
http://www.washingtonpost.com/wp-dyn/content/article/2006/10/20/AR2006102001539_pf.html
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Cerberus set to help China, India take flight-Snow

By Alison Tudor, Asia Private Equity Correspondent REUTERS 1:05 a.m. February 22, 2007 TOKYO – U.S. hedge fund Cerberus is exploring opportunities to help fast-growing Chinese and Indian firms make acquisitions abroad, said its chairman, former U.S. Treasury Secretary John Snow. Cerberus Capital Management LP, which has a mandate to invest across all asset classes and sectors globally, believes in China it could add significant value at state-owned enterprises. Cerberus already has a presence in Japan and Taiwan, and is in the process of setting up an office in Hong Kong. Longer-term it may set up offices in Beijing and potentially India. “Over time we hope to have a good footprint in India and China, probably China first,” Snow said in an interview with Reuters. Snow has visited China in recent weeks and will return over the coming months. He also plans to travel to India later this year. China's companies are keen to spread their wings abroad but several big deals, such as Chinese oil major CNOOC Ltd.'s acquisition of U.S. energy producer Unocal, have run aground during the U.S. approval process. The value of Asia Pacific companies acquiring U.S. firms is already running at $7.3 billion, nearly neck-and-neck with the 2006 total of 7.6 billion, and up from a recent low of $1.1 billion in 2003, according to data providers at Thomson Financial. Snow, an experienced politician and well-known name in Asian political circles, hopes to help smooth the way for Cerberus' co-investors. “In the case of investments in the United States, we would bring a real understanding and sensitivity to the process. We know the rules of that game that could help co-investors avoid legal barriers,” said Snow, who plans to visit Asia three or four times a year. Cerberus hopes to compete with other funds eager to invest in China by aligning its interests with those of the Chinese government. “What are China's objectives?” Snow said. “Well, modernise management practises, reduce the number of state-owned enterprises and make sure they create jobs.” The firm can bring about 125 operating executives, plucked from highest echelons of corporate America, to bear on improving the target company's performance and hence boost employment. Snow, prior to becoming treasury secretary in February 2003, was chief executive of U.S. railroad company CSX Corp. PRUDENT PLANNING Cerberus is the latest in a string of large U.S. funds to set up shop in Hong Kong. In January, both the Blackstone Group and Providence Equity Partners made big-name hires to boost deal-making in Asia. Consequently, many players in alternative investment fear that too much capital is chasing too few deals, artificially inflating prices and creating a bubble. Snow noted that Cerberus can invest in anything from auto financing to housing, so it will be well placed when the bubble bursts. Cerberus began as a small hedge fund, focusing mainly on distressed debt investing, and about five years ago it added a private equity practise to its array of strategies. Now Cerberus has about $22 billion under management, $8-10 billion of which is invested in Japan. Last year Cerberus led the acquisition of a majority stake in General Motor Corp.'s finance arm GMAC, alongside one of its Japanese portfolio companies, Aozora Bank Ltd. Investors in New York-headquartered Cerberus include state and corporate pension funds, insurance companies, foundations and endowments. REVOLVING DOORS Snow joined Cerberus in October, one in a train of politicians moving to hedge funds. Cerberus also boasts former U.S. Vice President Dan Quayle as chairman of Cerberus Global Investments, a division of Cerberus Capital Management. Another former U.S. treasury secretary, Lawrence Summers, who served in the Clinton administration, became a managing director at $25 billion D.E. Shaw & Co.. Snow, who was also an appointee in Gerald Ford's administration in the mid-1970s, followed that stint in government with about 25 years in the private sector before returning to public service in George Bush's government. Snow, 67, said the revolving doors must be very slow moving, and given his track record he would be back in government in another 25 years. http://www.signonsandiego.com/news/business/20070222-0105-asia-cerberus-snow.html

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BAWAG is sold to US fund Cerberus for 3.2 billion euro

http://www.austria.gv.at/site/4970/default.aspx
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Abbruzzese, the Vultures and Bruno by: am Sat Mar 10, 2007 at 11:23:12 AM EST

Having not heard much about Bruno's BFF Abbruzzese in a bit, I thought we could travel down memory lane and take a peak into the dark underworld that our Senate Majority Leader has dipped his toes into. And when I say underworld, I mean that literally. You see, back in the day, Joe's buddy Mr. Abbruzzese joined forces with Stephen Feinberg of Cerberus Capital Management LP whose "specialty . . . is investing in debt of companies at the gates of bankruptcy." Cerberus emerges from the underworld.  Yes, Cerberus - the three-headed dog that guards the gates of hell, the same Cerberus which is now breaking in the news for its connections to the Walter Reed Scandal and much much more! Let's look at how these vultures are tied to our friends Joe and Jerry. The 3 heads in our much smaller story here is that of Cerberus, Romulus Holdings Inc., and Mr. Abbruzzese's TechOne. This budding partnership was happening about the same time as the more reported Motient/Tejas shenangans - where Mr. Bruno's investment has raised eyebrows. But the stories are somewhat similar, as are the players. In the coverage at that time: "Vultures Circling" we see that "Romulus and Cerberus are known as "vulture funds," or investment banks that specialize in buying the debt of distressed companies at rock-bottom prices." And Romulus is "an investment vehicle of . . . Gary Singer, who was sentenced to 28 months in prison in 1995 as a result of insider-trading violations."  (my emphasis) These three formed CRT Satellite Investors LLC (for Cerberus, Romulus and TechOne), and Digital Satellite Lenders LLC (DST) which invested in WSNet, Inc. We learn in WSNet Bankruptcy Slammed that WSNet filed for Chapter 11 in 2002 after "its primary lender [DST] cleaned out its [WSNet] bank account. Alleged in this article that "Singer and Feinberg fired the company's CEO and replaced him with Abbruzzese" when WSNet tried to acquire 2 cable systems that the partner's in DST were working to acquire the public debt on. The NYT wraps up the affair this way: In 2000, Cerberus invested $42 million in the debt of WSNet Holdings, a small provider of satellite television programming. Over the next two years, according to shareholder lawsuits, Cerberus forced the company into bankruptcy by secretly buying up the bonds of companies WSNet hoped to acquire and forbidding WSNet executives from pursuing deals. Through bankruptcy proceedings, the fund tried to take control of the company, lawsuits contend. The suits also contend that Cerberus installed directors at WSNet who maximized Cerberus's profits at the expense of other stakeholders. The claims were settled for a relatively small amount [hmmm… does this imply that even though they settled, it wasn't really all that guilty?] in 2005, by which time Cerberus had recouped its initial investment in WSNet, according to the lawsuits. This is all happening at the same time that Singer's brother Steven is the chair of Motient and Abbruzzese is a director. The connection to Romulus is still strong as we see below the jump.  http://www.thealbanyproject.com/tag.do?subjectId=124 See More About This Case Below In Following Articles:

http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=tx&vol=/sc/040732&invol=1  See Article Below
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WSNet seeks Chapter 11

Austin Business Journal - October 24, 2002

Austin-based WSNet Holdings Inc. has filed for Chapter 11 bankruptcy protection.

The digital satellite television company estimates debt of $50 million to $100 million and assets of $10 million to $50 million, according filings in U.S. Bankruptcy Court in Austin.

In 2001, the privately held company reported revenue of $56.7 million, up from $52 million the year before.

As of March 31, WSNet employed 81 people.

In the bankruptcy petition, the company reported funds would be available for distribution to creditors. The asset figure presented to the court represents a consolidation of assets of all subsidiaries.

WSNet Holdings directed all questions to Chief Operating Officer Stuart Lefkowitz, who couldn't be reached for comment. The attorney in the bankruptcy case, J. Maxwell Tucker of the Dallas office of Winstead Sechrest & Minick PC, also couldn't be reached for comment.

In March 2000, the company raised $52 million from Motorola Inc. [NYSE: MOT] and CRT Satellite Investors LLC, a hedge fund in New York. In late 2001, WSNet received $30 million from CRT Satellite Investors.

In November 2001, Austin-based USOL Holdings Inc. [Nasdaq: USOL] and WSNet forged a long-term partnership to provide digital cable TV to thousands of residential customers in several of U.S. OnLine's markets. U.S. Online is a subsidiary of USOL.

WSNet moved from Minneapolis to Austin in 1999.
http://www.bizjournals.com/austin/stories/2002/10/21/daily32.html?t=printable
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Web	Results 1 - 21 of 21 for CRT Satellite Investors LLC and WSNet.. (0.38 seconds)

Original search results at :http://www.google.com/search?hl=en&q=CRT+Satellite+Investors+LLC++and+WSNet.
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ASSET STRIP

US private equity firm poised to win battle for Chrysler (times)
Cerberus, the US private equity firm, is poised to acquire Chrysler, the ailing carmaker, in a multi-billion dollar deal, after a fierce three-way battle against Blackstone, the private equity firm, and Magna International, a Canadian car parts maker.

The finishing touches were being put last night to a complex deal, in which the financing of Chrysler's $18 billion (£9 billion) worth of healthcare and pensions liabilities will play a significant role.

Cerberus was also thought still to be working out exactly how to absorb Chrysler's car financing operations into GMAC Financial Services, the former General Motors unit it recently acquired.

A deal could be announced as soon as today, although sources gave warning last night that the talks could still collapse, paving the way for a rival bidder to steal the prize.

Chrysler lost $1.5 billion in 2006 and is undergoing a recovery plan that will cut 13,000 jobs in Canada and the US and pare back production. Daimler-Chrysler announced in February that it was considering all options for the unit, which was taken to mean that it was being put up for sale.

This month, Magna had been viewed as the frontrunner to buy Chrysler because of the close ties between its chairman, Frank Stronach, and Daimler-Chrysler, his perceived determination to be a major player in the industry and his firm's car industry expertise.

But Mr Stronach appeared to play down his interest last week, saying he would be content for Magna to be one of four or five members of a larger ownership consortium, rather than the driving force. A further question mark emerged over Magna last week as Mr Stronach sold a $1.5 billion stake in the company to Basic Elements, a private Russian conglomerate controlled by Oleg Deripaska, the 39-year-old Russian billionaire with close ties to President Putin.

The link with Mr Deripaska raised concerns that a deal between Magna and Chrysler could face opposition by the United Auto Workers trade union and possibly create regulatory issues.

For its part, Cerberus helped its chances of winning the auction by hiring Wolfgang Bernhard, the former chief operating officer of Chrysler, to lead its bid. Mr Bernhard held that position from 2001 to 2004, during which time he masterminded Chrysler's last comeback.

Mr Bernhard is working alongside Robert Rewey, a former marketing executive at Ford Motor, JD Power and Associates, a research firm with extensive knowledge of the car industry, and its senior vice-president, Gary Dilts, formerly head of Chrysler's sales team.

Like General Motors and Ford, Chrysler has suffered from the rising cost of petrol causing consumers to switch from SUVs and pickup trucks to smaller vehicles.

Toyota, which overtook Ford and Chrysler to become the world's second-biggest carmaker, last month revealed that it was now the biggest.

Cerberus's worldwide investments include businesses involved in aerospace and military equipment, cars, building products, retailing, financial services, health care, distribution, paper and packaging, property, telecoms, transport and travel.

Chair's daughter returns at critical time for parts giant

April 12, 2007

Tony Van Alphen
Business Reporter

Frank Stronach, who likes to fashion himself as a business visionary, watched yesterday as his daughter, the politician, returned to auto-parts powerhouse Magna International Inc. at least two years before he said she would.

In a surprise move, Belinda Stronach announced she is abandoning her career in federal politics to immediately become executive vice-chair at Aurora-based Magna, the world's third-biggest auto-parts maker, which is at a critical stage in its future direction.

Stronach, 40, indicated in 2004 that she was ending a three-year stint as Magna's chief executive officer and entering politics for "the long haul."

Her insistence came after her father told an Austrian newspaper she was not a "career" politician and would return and oversee Magna in five to 10 years.

But Belinda Stronach, who received $8.9 million in compensation in her last full year at Magna, exceeded her sometimes impatient 74-year-old father's succession plan forecast by revealing she would not seek re-election as the Liberal member of Parliament for the Newmarket-Aurora riding.

"I am always assessing the best role I can play in public life, and after being encouraged by members of the corporate leadership at Magna to return, I have decided that the timing of my return to the business should not be delayed," she said yesterday in a statement.

"My father is looking to the future, the company is facing important strategic decisions, and the Canadian and global auto sector and economy is in a period of great challenge."

The move provides some clues to who will be Frank Stronach's eventual successor at Magna, the company he founded in the late 1950s and still runs with an iron grip as chair and controlling shareholder.

When his daughter left to enter politics, questions arose about who would eventually run the company.

Her younger brother Andy has not shown interest in running Magna and has spent most of his time handling the family's thoroughbred horse racing interests.

Frank Stronach, his wife, daughter and son control Magna through the Stronach Trust.

The trust controls Magna thorough multiple voting shares even though it holds only a small equity stake.

 

At the same time, insiders say that as long as Frank Stronach is alive, he will always make the major decisions at Magna.

Current co-chief executive officers Don Walker and Siegfried (Ziggy) Wolf said in a joint statement that Belinda Stronach will play an important role in Magna's long-term strategic planning and policy decisions.

Ed Lumley, Magna's lead director, said in an interview that he believes Belinda Stronach is a "very valuable asset' to the company.

Insiders said she has shown strength in driving Magna's overall direction and human-resources issues. However, they added that she needs to improve her skills in understanding finances and keeping a focus on important issues.

"She tends to get bored quickly and jump to something that would interest her," one former executive said.

Sources say Belinda Stronach, who could not be reached for comment yesterday, began to seriously consider her options early in the new year after her father broached the issue of a return to Magna during a long talk during the Christmas holidays.

Belinda Stronach, who is a single mother of two teenagers, said the heavy demands of politics on family life also played a role in her decision.

"As a mother, I want to spend some more time with my kids."

Her mansion is within a short walk of Magna's world headquarters in Aurora.

If the Liberals lose the next election, Stronach, a former minister of human resources, faces the prospect of several years in opposition with no power.

She replaces Fred Gingl, who is leaving the vice-chairman's job to run Magna's new aftermarket products division.

Gingl, a long-time Stronach confidante and another former Magna chief executive officer, won't stand for re-election on the company's board at the annual shareholders meeting next month.

Three independent directors are also leaving Magna's 12-member board, which has prompted persistent speculation about internal dissent.

Magna did not disclose whether Belinda Stronach will soon join the board or its powerful executive committee.

"That will evolve," company spokesperson Dan Donovan said. "We're in a transition process."

Stronach said she would continue to represent her constituents until the next federal election, which could come later this year.

Although Magna is one of the healthiest auto-parts companies in the world, profits have sagged in the past year as competition and shifting markets shake up the industry.

Magna is also deciding on an equity partner on a possible bid for the struggling North American operations of DaimlerChrysler AG.

The auto maker is Magna's biggest customer.

Magna, with sales that surpassed $24 billion (U.S.) last year, wants to play some role in the revival of Chrysler Group in North America and protect its own business.

In recent weeks, reports have said Magna would team up with private equity firm including U.S.-based Cerberus Capital Management, Ripplewood Holdings and Onex Corp. of Toronto. None of the firms have commented about their interest in bidding with Magna.

But analysts say joining Magna's operational strength with the financial muscle of a big equity firm would be an ideal combination in taking over Chrysler and making it successful.

"Every equity firm with a serious interest in Chrysler would be chasing Magna to make a deal work," one analyst said.

DaimlerChrysler plans to meet in New York with Magna and at least three other prospective buyers this week, according to Bloomberg News.

All Credit to:The Toronto Star

http://www.thestar.com/printArticle/202258
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