zipnzap Posted December 17, 2008 Share Posted December 17, 2008 http://blogs.wsj.com/deals/2008/12/17/why-...-into-chrysler/ This is sort of an answer to that other thread. So basically, it seems they can't pour in more money into Chrysler. Quote Link to comment Share on other sites More sharing options...
JasonM Posted December 17, 2008 Share Posted December 17, 2008 “Cerberus does not act like an ATM machine for its portfolio companies,” but they expect the US Taxpayers to be an ATM machine for their private equity firm? Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted December 17, 2008 Share Posted December 17, 2008 “Cerberus does not act like an ATM machine for its portfolio companies,” but they expect the US Taxpayers to be an ATM machine for their private equity firm? It's not a matter of "expecting". It's a matter of what they are allowed to do. You realize that Cerberus doesn't actually RUN Chrysler, right? Cerberus is a limited partnership, basically meaning it's like any company with shareholders, only there are a lot fewer of them. Do you expect GM's shareholders to start mailing in checks to prop up the company? It's the same premise you are proposing. Quote Link to comment Share on other sites More sharing options...
JasonM Posted December 17, 2008 Share Posted December 17, 2008 (edited) Do you expect GM's shareholders to start mailing in checks to prop up the company? It's the same premise you are proposing. no it isnt, its a lot different than a publically traded company, comparing shareholders of GM an private equity firm is apples to oranges. the article itself explains that Cerberus can and did loan $2 billion to Chrysler. It can do so again if it thought they had any chance of getting it back. they dont so they turned to the taxpayer ATM Look at what Cerberus said last year Cerberus Chairman Says Company to Support Chrysler for Long Haul By Eric Mayne WardsAuto.com The private equity firm offers “freedom for management to pursue long-term plans outside the glare of public markets.” Edited December 17, 2008 by JasonM Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted December 17, 2008 Share Posted December 17, 2008 no it isnt, its a lot different than a publically traded company, comparing shareholders of GM an private equity firm is apples to oranges. the article itself explains that Cerberus can and did loan $2 billion to Chrysler. It can do so again if it thought they had any chance of getting it back. they dont so they turned to the taxpayer ATM Yes, Cerberus had to change its charter to approve the previous loan. And as the article says, it's not like Cerberus just has cash laying around it can burn. It has investments in other companies as well. Should Cerberus take money from its other holdings and put it into Chrysler? I don't think that would make those other holding companies too happy. And well, to call it an ATM is over-simplifying everything. I didn't see a "Borrow Money" button on the last ATM I used. Quote Link to comment Share on other sites More sharing options...
jpd80 Posted December 17, 2008 Share Posted December 17, 2008 (edited) I think Cerebus management are required by law to act in the best interests of their stockholders. If investing cash in Chrysler is not in that best interest, maybe they fall foul of corporate law. Just my thoughts but isn't this what the government is worried about? Edited December 17, 2008 by jpd80 Quote Link to comment Share on other sites More sharing options...
JasonM Posted December 17, 2008 Share Posted December 17, 2008 And well, to call it an ATM is over-simplifying everything. I didn't see a "Borrow Money" button on the last ATM I used. thats because this bail out money aint likely to be paid back! Quote Link to comment Share on other sites More sharing options...
JasonM Posted December 17, 2008 Share Posted December 17, 2008 I think Cerebus management are required by law to act in the best interests of their stockholders.If investing cash in Chrysler is not in that best interest, maybe they fall foul of corporate law if they do so. Just my thoughts but isn't this what the government is worried about? and if its not in the best interest of Cerberus, how can it possibly be in the best interest of taxpayers? Quote Link to comment Share on other sites More sharing options...
jpd80 Posted December 17, 2008 Share Posted December 17, 2008 (edited) and if its not in the best interest of Cerberus, how can it possibly be in the best interest of taxpayers? Precisely!! The government is using borowed cash to do it too!! I agree that a line of credit should be extended to Ford, they can prove they are on the right path. GM and Chrysler should be forced int CH11 and the government supply funding for restructuring. Don't let either continue trading as they are, make them restructure as part of the deal. Edited December 17, 2008 by jpd80 Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted December 17, 2008 Share Posted December 17, 2008 thats because this bail out money aint likely to be paid back! There is always a risk of defaulting on a loan. Do you think the government is going to get back the $700B it is giving the banking industry? Hell, that wasn't even a loan. They aren't even expecting to get that back. And look at it more as an investment, not a loan, or a bailout, or anything else. Either try to prop them up, or lose billions more in lost revenues in the form of corporate taxes, income taxes paid by employees, and increased entitlement spending when all of those out of work former employees file for unemployment benefits. You'll find that those costs will quickly eclipse any amount paid to them in the form of a "bailout". Quote Link to comment Share on other sites More sharing options...
156n3rd Posted December 17, 2008 Share Posted December 17, 2008 They thought they'd have a cash cow when they took over. The MUST use their own funds to fix it or file for the big "B"! I own a Chrysler, a PTC, and it is the only Chrysler I would have ever owned. Last one I did own was an 88 Voyager. The PTC is a very awesome machine. Someone was "home" when they did that one. Cerebrus must go and poor Chrysler will have to go with it. :titanic: Quote Link to comment Share on other sites More sharing options...
FordBuyer Posted December 17, 2008 Share Posted December 17, 2008 IMO, Washington should try to engineer a deal with Chrysler and Nissan like they did with Bear Stearns and Chase. Make the money available so the deal can be pulled off. Then Nissan can close down all operations in Tennessee and take over the huge facility in Auburn Hills, MI that has complete design, engineering, and R&D facilities on one campus all centralized. Senator Corker I'm sure would support a deal like that. You get rid of one company and close down unneeded facilities that only add to overcapacity problems. Nissan needs a decent pickup truck and a decent minivan that they don't have now. Perfect fit IMO and Tennessee gets screwed which is perfect. Quote Link to comment Share on other sites More sharing options...
156n3rd Posted December 17, 2008 Share Posted December 17, 2008 More writing on the wall. I am glad I bought my PTC when I did. They have un-officially stopped their production as they have 70 days worth in their system. The plant which builds them is concentrating on the highly inferior Journey. My PTC is a 2002, the most content filled year. It now has 101,850 miles on it. For as long as it continues to give me the service that it has, I'll hold onto it. It's replacement will be a ????? Quote Link to comment Share on other sites More sharing options...
silvrsvt Posted December 17, 2008 Share Posted December 17, 2008 There is always a risk of defaulting on a loan. Do you think the government is going to get back the $700B it is giving the banking industry? Hell, that wasn't even a loan. They aren't even expecting to get that back. I'd have to disagree...I've heard second hand that when ever the US Government lends out money, it nearly all the time gets it back and even makes money on it! Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted December 17, 2008 Share Posted December 17, 2008 On Cerberus and Chrysler: Any bailout of Chrysler should come with this gigantic proviso: Funds from the sale of Chrysler equity to Renault/Nissan must go FIRST toward repayment of any government loan. The carpetbaggers running Chrysler do not DESERVE to turn a profit on any business that needs a government loan to survive. Quote Link to comment Share on other sites More sharing options...
CSMJ Posted December 18, 2008 Share Posted December 18, 2008 http://blogs.wsj.com/deals/2008/12/17/why-...-into-chrysler/ This is sort of an answer to that other thread. So basically, it seems they can't pour in more money into Chrysler. They got LOTS of cash. I say let them match what the govt gives them or they should get nothing.... Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted December 18, 2008 Share Posted December 18, 2008 They got LOTS of cash. I say let them match what the govt gives them or they should get nothing.... Should GM's shareholders be forced to match the government money they get also? Quote Link to comment Share on other sites More sharing options...
mettech Posted December 18, 2008 Share Posted December 18, 2008 Should GM's shareholders be forced to match the government money they get also? Hope not. Quote Link to comment Share on other sites More sharing options...
Critic Posted December 18, 2008 Share Posted December 18, 2008 Should GM's shareholders be forced to match the government money they get also? The shareholders are taking the worst bath in all of this so far. They have watched their monies they 'invested' in these companies plummet to almost nothing, and if a bankruptcy is filed, then they totally lose everything. Bondholders? I'm not exactly sure what their leverage is that entitles them to a return for standing in the line for monies from a bankruptcy. Supplies, they also lose big time, they sold something on a 30-90, etc, days good faith credit extension. oh yea, forgot thou, the corporate big-wigs always seem to come out smelling like a rose. Witness Enron. Quote Link to comment Share on other sites More sharing options...
CSMJ Posted December 18, 2008 Share Posted December 18, 2008 Should GM's shareholders be forced to match the government money they get also? Chrysler is a PRIVATE company.. there is a big difference here..... There owned by a hedge fund worth HUNDREDS of BILLIONS od dollars..... They got the cash to fund it its just that they know its a loosing entity so they dont want to invest anymore in it they would rather go bankrupt then put more cash in it. They bought it for 7% of there funds cash for $7 billion. Meaning there fund was worth over $100 billion.. They bought GMAC also. The only way they could get the Chrysler financial was to buy the whole company now there stuck!! Private companies keep ALL the profit and they dont have to show there books like GM does.. It would be like if ford had $90 billion in the bank and then not put anymore cash into Lincoln/Mercury and then asking the govt to help Lincoln/Mercury only. Thats what Cerberus is doing....... Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted December 18, 2008 Share Posted December 18, 2008 Chrysler is a PRIVATE company.. there is a big difference here..... There owned by a hedge fund worth HUNDREDS of BILLIONS od dollars..... They got the cash to fund it its just that they know its a loosing entity so they dont want to invest anymore in it they would rather go bankrupt then put more cash in it. They bought it for 7% of there funds cash for $7 billion. Meaning there fund was worth over $100 billion.. They bought GMAC also. The only way they could get the Chrysler financial was to buy the whole company now there stuck!! Private companies keep ALL the profit and they dont have to show there books like GM does.. It would be like if ford had $90 billion in the bank and then not put anymore cash into Lincoln/Mercury and then asking the govt to help Lincoln/Mercury only. Thats what Cerberus is doing....... The difference isn't as big as you want to make it. Cerberus is still a hedge fund owned by individual investors, just like GM, just not publicly, and not on as wide a scale. And it wouldn't be like Ford having $90B in the bank and not putting cash into Lincoln/Mercury. It would be more like Bill Ford having $90B in the bank and not putting any more money into Ford Motor Company. Quote Link to comment Share on other sites More sharing options...
mettech Posted December 18, 2008 Share Posted December 18, 2008 Chrysler is a PRIVATE company.. there is a big difference here..... There owned by a hedge fund worth HUNDREDS of BILLIONS od dollars..... They got the cash to fund it its just that they know its a loosing entity so they dont want to invest anymore in it they would rather go bankrupt then put more cash in it. They bought it for 7% of there funds cash for $7 billion. Meaning there fund was worth over $100 billion.. They bought GMAC also. The only way they could get the Chrysler financial was to buy the whole company now there stuck!! Private companies keep ALL the profit and they dont have to show there books like GM does.. It would be like if ford had $90 billion in the bank and then not put anymore cash into Lincoln/Mercury and then asking the govt to help Lincoln/Mercury only. Thats what Cerberus is doing....... It is my understanding that this is the major hang up for the bail out funds from the Pres. Quote Link to comment Share on other sites More sharing options...
kpc655 Posted December 18, 2008 Share Posted December 18, 2008 (edited) The difference isn't as big as you want to make it. Cerberus is still a hedge fund owned by individual investors, just like GM, just not publicly, and not on as wide a scale. And it wouldn't be like Ford having $90B in the bank and not putting cash into Lincoln/Mercury. It would be more like Bill Ford having $90B in the bank and not putting any more money into Ford Motor Company. Who are the investors? we don't know Who's on the board? we don't know Can we see the income statements, cashflow and balance sheets? no No-one seems to care (nor should) if i lost money on my investments, why should i bailout Cerberus's investors? Investment losses suck...but you shouldn't invest what you can't afford to lose. Edited December 18, 2008 by kpc655 Quote Link to comment Share on other sites More sharing options...
Critic Posted December 18, 2008 Share Posted December 18, 2008 (edited) Who are the investors? we don't knowWho's on the board? we don't know Does a former V.P. by the name of Wrong-Way Dan Quayle ring a bell to you? potatoe potatoe potatoe Edited December 18, 2008 by Critic Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted December 18, 2008 Share Posted December 18, 2008 (edited) Who are the investors? we don't knowWho's on the board? we don't know Can we see the income statements, cashflow and balance sheets? no No-one seems to care (nor should) if i lost money on my investments, why should i bailout Cerberus's investors? I'm sure those in Congress have seen them. Other than that, who needs to see them? And well, if you want a bailout of GM or Ford, you are bailing out those investors, no? I just find it amusing that so many Americans are upset about this "bailout", yet they have absolutely no problems with the way their federal government has squandered billions of dollars on other useless projects every year that are far less important. Edited December 18, 2008 by NickF1011 Quote Link to comment Share on other sites More sharing options...
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