Wednesday, July 25, 2007


If you haven't got anything nice to say about anybody, come sit next to me.

— Alice Roosevelt Longworth

Well, Cerberus Capital Management just exercised the Chrysler Put.

News broke this morning that it has abandoned the attempt to sell $12 billion of loans to help finance the purchase of the perennially troubled automaker. Apparently it couldn't negotiate acceptable terms with potential investors, because would-be lenders kept projectile vomiting all over the draft indentures. Instead, along with DaimlerChrysler it will pony up some spare change ($2 billion) and collect the rest from its committed financing banks, JPMorgan Chase, Citigroup, Goldman Sachs, Bear Stearns, and Morgan Stanley. The deal to buy out Chrysler will close as scheduled on August 3rd.

Senior bankers from Cerberus's debt bitches new best friends couldn't be reached for further comment, as they were all nursing painful dog bites on their derrieres from their three-headed client. Chief Financial Officers at the five banks were likewise incommunicado, as they were busy preparing massive reversals to the accrued bonus pools to cover expected loan losses and simultaneously polishing their resumes. Staff at all five banks' leveraged finance groups were put on suicide watch.

Not everyone was unhappy, though. PIMCO's Bill Gross, who yesterday released another broadside against loose morals and excess promiscuity in the credit markets—as well as identifying the Chrysler buyout financing as the coal mine canary to watch—was observed Irish clog dancing down Wall Street with Michael Flatley. Members of the 85 Broad Street cell of Al Qaeda issued a communiqué declaring a cessation of hostilities against Goldman Sachs employees, stating that "the infidels have been punished enough."

Finally, acquisitive corporate chieftains everywhere giggled in delight and temporarily put away their Steve Schwarzman voodoo dolls, as the prospect of reduced liquidity in the lending market summarily shaved a point and a half off EBITDA multiples required to clear the market for strategic takeovers. Their secretaries began dusting off bulge bracket investment banker Rolodex cards and practicing their best brush-off routines, in anticipation of a surge of incoming calls from bankers desperate to reestablish "relationships" with corporate buyers abandoned in the last few years of worshiping at the altar of private equity.

In fact, the only person involved who isn't particularly excited about the situation is Stephen Feinberg, head of Cerberus. He is probably much more concerned about how he can turn his newly-purchased LeBaron into a Maserati.

© 2007 The Epicurean Dealmaker. All rights reserved.