Cerberus defends stance on Chrysler investments

Cerberus wants to protect its investors and intends to stay within its internal rules limiting how much capital it can commit to an individual company. That’s the reason the private-equity firm is asking for more federal loans instead of plowing further cash into Chrysler. These comments were included in a letter from Mark Neporent, Cerberus’ COO, the the New York Times.

Neoparent was responding to a Times editorial that said Cerberus has not done enough to bolster Chrysler’s future prospects and called the production cuts made to date “paltry,” leaving the automaker with more than a million units of overcapacity it is unlikely to need for the near-term future. The editorial specifically asked why Cerberus hasn’t invested more money.

“It seems the secretive private-equity fund is willing to gamble on Chrysler’s survival with the taxpayer’s dime, but not its own,” the Times said. “Saying no might even make Cerberus reconsider and put up some cash of its own.”

Neoparent responded by writing: “Why should these retirees, universities and charities, simply because they are represented by a private investment manager, be required to take additional risks or make additional investments, when GM or Ford shareholders are not?”

Cerberus Capital Management’s own rules limit investment in any one holding to five percent of the fund’s assets.

 Like on Facebook