Cerberus sells most of stake in GMAC, Chrysler: report

DETROIT (Reuters) - Cerberus Capital Management has sold “significantly” more than half of its stake in GMAC and Chrysler LLC to a group of about 90 investors, the Financial Times reported on Monday.

The timing of those transactions was not clear. A Cerberus representative could not be immediately reached for comment.

A Chrysler official, who asked not to be named, said that Cerberus had co-investors when it bought Chrysler but had not sold any of its equity in the automaker.

At the time Chrysler's sale by Daimler AG DAIGn.DE was announced in May 2007, Daimler and Cerberus had said that it was a Cerberus affiliate that was acquiring 80.1 percent of the No. 3 U.S. automaker.

The stake of any co-investors joining the Cerberus deal was not disclosed at that time.

In the year since, Cerberus has run into difficulty with its high-profile automotive deals. Chrysler, like other major automakers, has been hurt by the sharp downturn in U.S. auto sales and the shift from higher-margin trucks to small cars. GMAC, meanwhile, has suffered from losses at its mortgage financing unit GMAC.

The Financial Times said that although Cerberus invested $7.4 billion in both transactions, it has since sold the majority of the equity to other investors, citing unnamed people familiar with the situation.

Cerberus earned fees of up to $1 billion for the sale of its holdings as it unloaded risk to other investors, the newspaper said.

Chrysler executives have repeatedly said that Cerberus founder Steve Feinberg is committed to a long-term investment strategy for the automaker and to restoring what they say he regards as an “American icon.”

Feinberg, who shuns media attention, has not made any public comments since the Chrysler deal was announced.

The newspaper said investors in the group that bought stakes in the automotive assets from Cerberus included Cerberus-controlled Aozora Bank of Japan, Avenue Capital, Cyrus Capital Partners, Franklin Templeton Investments and Oak Hill Advisors.

Aozora Bank 8304.T posted a 93-percent drop in earnings for the March-ended fiscal year due in part to losses related to the U.S. subprime loan market and GMAC.

Aozora, which is nearly 46-percent owned by Cerberus, has said it made a $500-million investment in GMAC as part of the Cerberus-led consortium that bought a 51-percent stake in the finance company from General Motors Corp GM.N in 2006.

Reporting by Kevin Krolicki, editing by Dave Zimmerman and Gerald E. McCormick