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Cerberus Said to Seek Buyers for Auto Lender Chrysler Financial

November 24, 2010
2 min to read


Cerberus Capital Management LP is seeking buyers for auto lender Chrysler Financial, which the private-equity firm acquired as part of its takeover of Chrysler LLC in 2007, said two people with knowledge of the matter.


Cerberus in recent days began soliciting interest in the Farmington Hills, Michigan-based business from large banks, said the people, who spoke on condition of anonymity because the discussions are private, reported Bloomberg. The former lending arm of Chrysler has a book value, or assets minus liabilities, of about $6 billion or $7 billion, the people said yesterday.

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A sale of Chrysler Financial would represent another step in unwinding Cerberus founder Stephen Feinberg’s bet on the U.S. auto industry. His takeovers of General Motors Corp.’s auto lender in 2006, followed by Chrysler the following year, preceded a decline in U.S. auto sales that sent both carmakers into bankruptcy.


Feinberg, 50, subsequently lost control of both GMAC and Chrysler and held on to Chrysler Financial. The lender repaid its $1.5 billion in U.S. Treasury Department bailout funds last year and in July sought to return to large-scale lending.


Peter Duda, a spokesman for Cerberus, declined to comment yesterday. A representative of Chrysler Financial didn’t return a call left after regular business hours yesterday.


Capital One Financial Corp. and Banco Santander SA are among the banks that have acquired U.S. loan portfolios this year. McLean, Virginia-based Capital One bought a credit-card portfolio from General Electric Co., and Santander bought a $4 billion car-loan portfolio from HSBC Holdings Plc.


Chrysler Financial Portfolio

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Chrysler Financial had $26 billion of loans and had issued less than $100 million of new loans in the first half of this year, a person with knowledge of Chrysler Financial’s business said in July.


The past few years have seen both GM and Chrysler severed from their captive lenders. GM sold Cerberus a 51 percent stake in GMAC in 2006. Bailouts of that lender, now known as Ally Financial Inc., left the U.S. government in control of the company and shrunk Cerberus’s stake to 14.9 percent.


Cerberus bought a majority stake in Chrysler for $7.4 billion from DaimlerChrysler AG in 2007. Chrysler, the third- biggest U.S. automaker, went bankrupt in 2009 along with General Motors Corp., and Ally supplanted Chrysler as the primary lender for Chrysler dealers.


The surviving Chrysler automaker is now controlled by managers from Fiat SpA.


Meanwhile, General Motors Co. this year got back into captive lending, acquiring subprime lender AmeriCredit Corp. for about $3.5 billion as its new finance arm.

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