Cerberus makes millions despite the closure of Mervins

[XDCX]

There's a story in the Wall Street Journal that is worthy of attention for anyone that has a stake in Chrysler's future.

The story details how Cerberus took a stake in Mervins and then restructured the company into two distinct corporations. They created an operating corporation and an property corporation - the industry slang is "opco-propco." As a restructured company Cerberus could allow the operating corporation to fail while still making millions in the property corporation.

That's right, 177 stores were closed, 18,000 people lost their jobs but Cerberus still made millions.

Here's a link to the Wall Street Journal report: http://online.wsj.com/article/SB1227...googlenews_wsj

[SHACOS]

Hmmm...sound like Chrysler anyone?

[XDCX]

Originally Posted by SHACOS

Hmmm...sound like Chrysler anyone?

That's exactly what I thought.

At this point, I wouldn't put anything beyond the capabilities of Cerberus.

In my opinion, Cerberus desperately wants to dump Chrysler and their most favored method is to do a deal with GM. As I've stated before, I don't think the GM/Chrysler merger will happen because the Feds don't want to fund a merger that would result in massive job losses.

So, that leaves the Mervins solution - split it up and sell it off.

Here's one possibility - Split Chrysler into five pieces:

1. Chrysler Brand
2. Jeep Brand
3. Dodge Brand
4. Mopar Brand
5. Chrysler Financial

Cerberus would find buyers for Jeep and Dodge and would sell-off a package that included the engine, transmission and assembly plants.

Cerberus would also find a buyer for the Mopar Parts operation and would sell-off a package that included the Distribution Center, Regional Depots, etc.

Cerberus would bankrupt the Chrysler division just like they did with Mervins but they would retain the Chrysler Financial division as keep it and a long term holding.

Granted, this is 100% speculation and I'm not predicting that this will happen. That said, I'd be willing to bet that this is one option that Cerberus is exploring.