The genius investor and extraodinaire planner for investments, acquisitions and equity stocking has expressed his views and take on the big auto deal of Cerberus with Daimler Chrysler. In an interview with a private business weekly, Wilbur Ross clearly stated that this particular deal shall be different from the one's before as Chapter 11 dealing with bankruptcy shall not be evoked.
As both a supplier to the big automakers and a negotiator with their unions, Ross shared his thoughts on what Cerberus' deal with Chrysler means for automakers and for private equity, as well as his take on the market in general.
Wilbur Ross is known to 'restructure' a company with the help of evoking the Chapter 11 of the company rule book which saves the payout of the retiree benefits. This strategy has paid huge dividends to Ross in the past where he has supposedly been able to cause a turn around for the company. Speaking about the Cerberus deal he said it would be silly to think that Chapter 11 would be used while using as much as $ 7 billion of equity.
Now 69, Ross sold his seven-year-old private equity firm, WL Ross & Co., to British investment firm Amvescap for $375 million last July.
Ross commenting on the deal said,” Private equity has raised hundreds of billions, and the leverage is for all practical purposes unlimited. Chrysler is complicated because it's a consumer marketing situation and a huge industrial restructuring on a scale you wouldn't have expected private equity to take on even a couple of years ago.”
Adding to this he said that Chrysler was going from being an unwanted stepchild to owners who want it enough to put $7 billion into it.
“One thing was clear: Daimler wasn't going to keep putting money in there. Announcing Mr. LaSorda would remain the CEO, that's also a little unusual. As often as not the new group takes a big meat ax to management”, he said expressing his surprise at the management’s decision.
Taking into account this particular conversation with the investor par excellence it is clear that the employees at the Daimler shall not have to face the heat following the Cerberus deal getting through with the question of the clause not arising .
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