In today's Wall Street Journal, there is an article about the challenges Cerberus is facing raising the required capital to complete the buyout of Chrysler from Daimlerchrysler AG (DCX).
"Investors who sat in on Cerberus's presentations as well as bankers familiar with its offering said the market is taking a cautious look at the company's bid to raise $62 billion for the deal. Potential investors are concerned they could lose the bulk of their money if Cerberus's turnaround of Chrysler fails and the auto maker has to seek bankruptcy protection, these people said."
In a related story, they also canned David Thursfield - an ex Ford executive that had been running GDX Automotive - which appears to be in big trouble and may end up filing for bankruptcy. (Goodbye $150 million dollar investment from Cerberus!)
Cerberus also backed out of the deal to buy automotive component maker Delphi.
So it turns out the Auto Industry is full of problems. Who knew?
Even with the advantages of being private, I don't see how Cerberus is going to magically pull off a turnaround at Chrysler. As I see it, they face too many challenges.
Unless Cerberus has the magic formula to solve all these issues, I can't see Chrysler suddenly becoming a reformed company. If I were the banks, I'd be very skeptical too.