Cerberus and Mr. Invisible-Stephen Feinberg

The founder of Cerberus Stephen Feinberg is one of the most elusive men in America. Hardly any photos can be found of him! Try and find some! Good luck!


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Since graduating from Princeton 25 years ago, Feinberg has never given an interview and has never been photographed by the press.

Not that there has been much demand until now. On Wall Street, the C.E.O. of Cerberus Capital Management, an investment firm with $26 billion in assets under management, has long been admired. (“You probably think you’re smart,” says one former employee. “Now take your brain and mine, take them to the 28th power, and you have Steve Feinberg.”)

To the general public, though, Cerberus has been just another shadowy buyer of companies in an already overpopulated field. The firm’s purchases include a grab bag of brands that lurk on the edge of consumer consciousness: Fila sporting goods, Mervyn’s department stores, Alamo and National rental cars, Air Canada, the GMAC lending arm of General Motors.


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Cerberus and Mr. Invisible-Stephen Feinberg

The founder of Cerberus Stephen Feinberg is one of the most elusive men in America. Hardly any photos can be found of him! Try and find some! Good luck!


See more Car Pictures at CarSpace.com

Since graduating from Princeton 25 years ago, Feinberg has never given an interview and has never been photographed by the press.

Not that there has been much demand until now. On Wall Street, the C.E.O. of Cerberus Capital Management, an investment firm with $26 billion in assets under management, has long been admired. (“You probably think you’re smart,” says one former employee. “Now take your brain and mine, take them to the 28th power, and you have Steve Feinberg.”)

To the general public, though, Cerberus has been just another shadowy buyer of companies in an already overpopulated field. The firm’s purchases include a grab bag of brands that lurk on the edge of consumer consciousness: Fila sporting goods, Mervyn’s department stores, Alamo and National rental cars, Air Canada, the GMAC lending arm of General Motors.


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Who Is Cerberus Capital Management and Steve Feinberg?

Cerberus Capital Management, L.P. is one of the largest private equity investment firms in the United States. The firm is based in New York City, and run by 48-year-old financier Steve Feinberg. Former U.S. Vice President Dan Quayle has been a prominent Cerberus spokesperson and runs one of its international units.

Founded in 1992, Cerberus (named for the legendary three-headed dog in Greek mythology that guarded the gates of Hades) invests primarily in companies which are near bankruptcy in the hope of making the businesses it acquires profitable. Feinberg has stated to his employees that while the Cerberus name seemed like a good idea at the time, he later regretted naming the company after the mythological dog.[1]

The company has been a very active acquirer of businesses over the past several years and now has sizable investments in sportswear, paper products, military services, real estate, energy, retail, glassmaking, transportation, and building products. In 2006, its holdings amounted to $24 billion. While many of its peers have bought out companies in order to strip assets and sell on for a profit, Cerberus builds its reputation on identifying firms that are undervalued, and assisting in rejuvenating them by working with current management.[1]

On October 19, 2006, John W. Snow, President George W. Bush's second United States Secretary of the Treasury, was named chairman of Cerberus.






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Who Is Cerberus Capital Management and Steve Feinberg?

Cerberus Capital Management, L.P. is one of the largest private equity investment firms in the United States. The firm is based in New York City, and run by 48-year-old financier Steve Feinberg. Former U.S. Vice President Dan Quayle has been a prominent Cerberus spokesperson and runs one of its international units.

Founded in 1992, Cerberus (named for the legendary three-headed dog in Greek mythology that guarded the gates of Hades) invests primarily in companies which are near bankruptcy in the hope of making the businesses it acquires profitable. Feinberg has stated to his employees that while the Cerberus name seemed like a good idea at the time, he later regretted naming the company after the mythological dog.[1]

The company has been a very active acquirer of businesses over the past several years and now has sizable investments in sportswear, paper products, military services, real estate, energy, retail, glassmaking, transportation, and building products. In 2006, its holdings amounted to $24 billion. While many of its peers have bought out companies in order to strip assets and sell on for a profit, Cerberus builds its reputation on identifying firms that are undervalued, and assisting in rejuvenating them by working with current management.[1]

On October 19, 2006, John W. Snow, President George W. Bush's second United States Secretary of the Treasury, was named chairman of Cerberus.






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Cerberus Isn't Seeking GM Management Changes in Chrysler Merger

By Mike Ramsey

Oct. 25 (Bloomberg) -- Chrysler LLC owner Cerberus Capital Management LP isn't seeking to remove General Motors Corp. leaders including Chief Executive Officer Rick Wagoner in a merger of the automakers, a person familiar with the talks said.

Cerberus also wants a ``meaningful'' stake, not a majority, in a combined company, said the person, who asked not to be identified because the negotiations are private. It's too early to say whether the New York-based buyout firm would have board representation, the person said.

Wagoner, 55, is the longest-serving CEO at a U.S. automaker, after taking the top spot at Detroit-based GM in 2000. Alan Mulally joined Ford Motor Co. in 2006, and Robert Nardelli was hired at Chrysler last year. The person declined to comment on Nardelli's role, if any, in a GM-Chrysler merger.

``GM has good management,'' said Laurie Harbour-Felax, president of consulting firm Harbour-Felax Group in Berkley, Michigan. She questioned whether Cerberus ``could force a change.''

Cerberus has been in talks with GM and Nissan Motor Co. on a sale, merger or alliance involving Auburn Hills, Michigan- based Chrysler, whose 25 percent U.S. sales decline through September is the steepest among major automakers. GM's sales slide is 18 percent this year, and the biggest U.S. automaker has posted almost $70 billion in losses since 2004.

GM and Cerberus are targeting month's end to complete a deal, while Cerberus and Tokyo-based Nissan also have exchanged proposals, according to people familiar with the matter.

Spokesmen for GM, Chrysler and Cerberus haven't confirmed that the companies are in talks. Cerberus bought 80.1 percent of Chrysler from Daimler AG in 2007, and is negotiating to acquire the rest.

Chrysler's Losses

The shrinking U.S. auto market is ramping up pressure for Chrysler to find savings and stem losses that the company indicated had totaled more than $1.08 billion through the first half. The third-largest U.S. automaker has said it had $11.7 billion in cash at the end of June.

Chrysler said yesterday it would eliminate 25 percent of its salaried workforce, or about 4,300 jobs, by the end of the year, and trim capital spending on everything except its most- important products. That followed the Oct. 23 announcement of 1,825 job cuts at two sport-utility vehicle plants.

Further ``organizational and restructuring'' actions will be taken in the near future, Chrysler said yesterday, without elaborating.

Merger's Logic Questioned

Analysts including Citigroup Global Markets Inc.'s Itay Michaeli have questioned the logic of a GM-Chrysler merger, arguing that it could drag down both automakers before attaining long-term savings.

A combined company would need $10 billion to $12 billion in fresh liquidity, Michaeli wrote in a note to investors on Oct. 20. The New York-based analyst rates GM as ``sell.''

Cerberus may contribute some liquidity to a deal, people familiar with the negotiations have said.

GM also is working to return to profit. The automaker said yesterday that its planned reductions in the salaried workforce will go beyond the 5,000 jobs already targeted and that it will stop contributing to some retirement-savings plans.

GM fell 15 cents, or 2.5 percent, to $5.95 yesterday in New York Stock Exchange composite trading. Since the end of June 2000, the month Wagoner became CEO, the shares have dropped by 90 percent, the worst performance among the 30 companies in the Dow Jones Industrial Average.

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Cerberus Isn't Seeking GM Management Changes in Chrysler Merger

By Mike Ramsey

Oct. 25 (Bloomberg) -- Chrysler LLC owner Cerberus Capital Management LP isn't seeking to remove General Motors Corp. leaders including Chief Executive Officer Rick Wagoner in a merger of the automakers, a person familiar with the talks said.

Cerberus also wants a ``meaningful'' stake, not a majority, in a combined company, said the person, who asked not to be identified because the negotiations are private. It's too early to say whether the New York-based buyout firm would have board representation, the person said.

Wagoner, 55, is the longest-serving CEO at a U.S. automaker, after taking the top spot at Detroit-based GM in 2000. Alan Mulally joined Ford Motor Co. in 2006, and Robert Nardelli was hired at Chrysler last year. The person declined to comment on Nardelli's role, if any, in a GM-Chrysler merger.

``GM has good management,'' said Laurie Harbour-Felax, president of consulting firm Harbour-Felax Group in Berkley, Michigan. She questioned whether Cerberus ``could force a change.''

Cerberus has been in talks with GM and Nissan Motor Co. on a sale, merger or alliance involving Auburn Hills, Michigan- based Chrysler, whose 25 percent U.S. sales decline through September is the steepest among major automakers. GM's sales slide is 18 percent this year, and the biggest U.S. automaker has posted almost $70 billion in losses since 2004.

GM and Cerberus are targeting month's end to complete a deal, while Cerberus and Tokyo-based Nissan also have exchanged proposals, according to people familiar with the matter.

Spokesmen for GM, Chrysler and Cerberus haven't confirmed that the companies are in talks. Cerberus bought 80.1 percent of Chrysler from Daimler AG in 2007, and is negotiating to acquire the rest.

Chrysler's Losses

The shrinking U.S. auto market is ramping up pressure for Chrysler to find savings and stem losses that the company indicated had totaled more than $1.08 billion through the first half. The third-largest U.S. automaker has said it had $11.7 billion in cash at the end of June.

Chrysler said yesterday it would eliminate 25 percent of its salaried workforce, or about 4,300 jobs, by the end of the year, and trim capital spending on everything except its most- important products. That followed the Oct. 23 announcement of 1,825 job cuts at two sport-utility vehicle plants.

Further ``organizational and restructuring'' actions will be taken in the near future, Chrysler said yesterday, without elaborating.

Merger's Logic Questioned

Analysts including Citigroup Global Markets Inc.'s Itay Michaeli have questioned the logic of a GM-Chrysler merger, arguing that it could drag down both automakers before attaining long-term savings.

A combined company would need $10 billion to $12 billion in fresh liquidity, Michaeli wrote in a note to investors on Oct. 20. The New York-based analyst rates GM as ``sell.''

Cerberus may contribute some liquidity to a deal, people familiar with the negotiations have said.

GM also is working to return to profit. The automaker said yesterday that its planned reductions in the salaried workforce will go beyond the 5,000 jobs already targeted and that it will stop contributing to some retirement-savings plans.

GM fell 15 cents, or 2.5 percent, to $5.95 yesterday in New York Stock Exchange composite trading. Since the end of June 2000, the month Wagoner became CEO, the shares have dropped by 90 percent, the worst performance among the 30 companies in the Dow Jones Industrial Average.

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Will The Big Three Ask The UAW To Re-Open The 2007 Contract?

More buyouts will not help automakers shed more workers, Gettelfinger says

Louis Aguilar / The Detroit News

DETROIT -- United Auto Workers President Ron Gettelfinger said he didn't think another round of buyouts would help automakers shed more of their hourly work force but he deflected a question on whether the union is considering re-opening the landmark national labor contracts signed last year with the Detroit Big Three automakers.

"I'm not sure the value of a buyout at this point and time," Gettelfinger told reporters this morning at Detroit's Cobo Center, where the labor union president was honored by the Goodfellows charity organization. Gettelfinger reasoned that UAW-protected autoworkers who were in the position to leave their jobs would have taken one of the previous rounds of buyouts and early retirement offers and he didn't see the "effectiveness" of another round.

Gettelfinger acknowledged that he was in discussions with the Big Three automakers as they grapple with the immense impact of the global financing crisis and the worst auto sales market in 15 years, but he declined to provide details.

When asked whether he was discussing the possibility of re-opening last year's labor agreements, Gettelfinger responded: "Next question."

He was far clearer on protecting the independent health care trusts created for retirees.

Under the four-year labor contracts, Detroit's automakers are shifting retiree health care liabilities to the independent health care trusts, known as a Voluntary Employee Beneficiary Association, VEBA. The VEBA trusts are scheduled to begin operating Jan. 1, 2010, with about $30 billion of what ultimately will be nearly $52 billion in automaker contributions. The UAW has said in the past the money will last for 80 years.

"We do not want to open up VEBA," Gettelfinger said.

"That was one of the most difficult and challenging decisions I ever had to make," he said, referring to the fund's creation.

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Will The Big Three Ask The UAW To Re-Open The 2007 Contract?

More buyouts will not help automakers shed more workers, Gettelfinger says

Louis Aguilar / The Detroit News

DETROIT -- United Auto Workers President Ron Gettelfinger said he didn't think another round of buyouts would help automakers shed more of their hourly work force but he deflected a question on whether the union is considering re-opening the landmark national labor contracts signed last year with the Detroit Big Three automakers.

"I'm not sure the value of a buyout at this point and time," Gettelfinger told reporters this morning at Detroit's Cobo Center, where the labor union president was honored by the Goodfellows charity organization. Gettelfinger reasoned that UAW-protected autoworkers who were in the position to leave their jobs would have taken one of the previous rounds of buyouts and early retirement offers and he didn't see the "effectiveness" of another round.

Gettelfinger acknowledged that he was in discussions with the Big Three automakers as they grapple with the immense impact of the global financing crisis and the worst auto sales market in 15 years, but he declined to provide details.

When asked whether he was discussing the possibility of re-opening last year's labor agreements, Gettelfinger responded: "Next question."

He was far clearer on protecting the independent health care trusts created for retirees.

Under the four-year labor contracts, Detroit's automakers are shifting retiree health care liabilities to the independent health care trusts, known as a Voluntary Employee Beneficiary Association, VEBA. The VEBA trusts are scheduled to begin operating Jan. 1, 2010, with about $30 billion of what ultimately will be nearly $52 billion in automaker contributions. The UAW has said in the past the money will last for 80 years.

"We do not want to open up VEBA," Gettelfinger said.

"That was one of the most difficult and challenging decisions I ever had to make," he said, referring to the fund's creation.

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Part 2-GM, Cerberus step up Chrysler sale talks: sources

Both parties remain interested in reaching a deal, but GM is working to clarify Chrysler's pension liabilities and the risk the automaker's suppliers could face from a merger, the sources said.

Analysts and others close to the talks have suggested that 30 percent of Chrysler's current suppliers could be at risk if GM completed an acquisition and worked to cut Chrysler's slower-selling and weaker models.

In addition, GM is considering contingency plans in case the Cerberus talks failed to produce a deal, sources said.

Those alternative scenarios include approaching an outside investor and asking the government for stepped-up assistance of some kind, one person briefed on the talks said. GM has lost more than $50 billion in the last three years.

With auto sales slowing sharply in Western Europe and on track to drop to 18-year lows in the United States this month, GM is under increasing pressure to slow a cash burn rate that stood at $3.6 billion in the second quarter and is expected to have accelerated since.

A major motivation for GM in acquiring Chrysler has been access to the smaller automaker's remaining cash, sources have said. Chrysler lost about $1 billion in the first half of the year and ended June with $11.7 billion.

"UNIMAGINABLE TIMES"

Chrysler has been hit hardest by the slump in the U.S. market with its sales dropping 25 percent to date. GM's sales have dropped 18 percent.

Partly for that reason, analysts have challenged the logic of a merger, arguing that the struggling automakers are saddled with many of the same problems, including a surplus of workers, plants, brands and dealers. Continued...



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Part 2-GM, Cerberus step up Chrysler sale talks: sources

Both parties remain interested in reaching a deal, but GM is working to clarify Chrysler's pension liabilities and the risk the automaker's suppliers could face from a merger, the sources said.

Analysts and others close to the talks have suggested that 30 percent of Chrysler's current suppliers could be at risk if GM completed an acquisition and worked to cut Chrysler's slower-selling and weaker models.

In addition, GM is considering contingency plans in case the Cerberus talks failed to produce a deal, sources said.

Those alternative scenarios include approaching an outside investor and asking the government for stepped-up assistance of some kind, one person briefed on the talks said. GM has lost more than $50 billion in the last three years.

With auto sales slowing sharply in Western Europe and on track to drop to 18-year lows in the United States this month, GM is under increasing pressure to slow a cash burn rate that stood at $3.6 billion in the second quarter and is expected to have accelerated since.

A major motivation for GM in acquiring Chrysler has been access to the smaller automaker's remaining cash, sources have said. Chrysler lost about $1 billion in the first half of the year and ended June with $11.7 billion.

"UNIMAGINABLE TIMES"

Chrysler has been hit hardest by the slump in the U.S. market with its sales dropping 25 percent to date. GM's sales have dropped 18 percent.

Partly for that reason, analysts have challenged the logic of a merger, arguing that the struggling automakers are saddled with many of the same problems, including a surplus of workers, plants, brands and dealers. Continued...



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GM, Cerberus step up Chrysler sale talks: sources

By Jui Chakravorty Das and Kevin Krolicki

NEW YORK/DETROIT (Reuters) - General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) has intensified talks to buy Chrysler LLC's auto operations from Cerberus Capital Management in a deal that would also involve a transfer of ownership of GMAC, people familiar with the talks said on Friday.

GM intends to seek U.S. government aid to support any deal, the sources said, potentially injecting a polarizing and urgent question of economic policy into the final stretch of the presidential campaign.

Cerberus, the private equity firm that controls Chrysler, also remains in talks with other parties, including Nissan Motor Co Ltd (7201.T: Quote, Profile, Research, Stock Buzz), about a deal for the struggling automaker.

GM, Cerberus and Chrysler declined comment.

But the GM talks are the most advanced and involve at a working level GM Chief Operating Officer Fritz Henderson and senior Cerberus representatives, sources said.

Chrysler Chief Executive Bob Nardelli has not been directly involved in the talks but remains in close touch with Cerberus negotiators, they said.

Cerberus, which owns 51 percent of former GM finance arm GMAC, is interested in an increased stake in the unit, sources said. GM retains the other 49 percent of GMAC at present after selling a controlling stake to the private equity firm for $7.4 billion in a 2006 deal.

Cerberus is also interested in offloading the auto operations but would like to have a significant stake in the combined company, the sources said. Continued




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GM, Cerberus step up Chrysler sale talks: sources

By Jui Chakravorty Das and Kevin Krolicki

NEW YORK/DETROIT (Reuters) - General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) has intensified talks to buy Chrysler LLC's auto operations from Cerberus Capital Management in a deal that would also involve a transfer of ownership of GMAC, people familiar with the talks said on Friday.

GM intends to seek U.S. government aid to support any deal, the sources said, potentially injecting a polarizing and urgent question of economic policy into the final stretch of the presidential campaign.

Cerberus, the private equity firm that controls Chrysler, also remains in talks with other parties, including Nissan Motor Co Ltd (7201.T: Quote, Profile, Research, Stock Buzz), about a deal for the struggling automaker.

GM, Cerberus and Chrysler declined comment.

But the GM talks are the most advanced and involve at a working level GM Chief Operating Officer Fritz Henderson and senior Cerberus representatives, sources said.

Chrysler Chief Executive Bob Nardelli has not been directly involved in the talks but remains in close touch with Cerberus negotiators, they said.

Cerberus, which owns 51 percent of former GM finance arm GMAC, is interested in an increased stake in the unit, sources said. GM retains the other 49 percent of GMAC at present after selling a controlling stake to the private equity firm for $7.4 billion in a 2006 deal.

Cerberus is also interested in offloading the auto operations but would like to have a significant stake in the combined company, the sources said. Continued




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Chrysler Cuts 25% Of It's White Collar Workforce

Chrysler to cut 5,000 white-collar workers

Alisa Priddle and David Shepardson / The Detroit News

Chrysler LLC plans to cut 5,000 of its 17,300 salaried and contract workers worldwide by Jan. 1, a deep cut that cannot be done without some involuntary layoffs, say company officials and Michigan congressional aides briefed on the matter.

The employees, about 95 percent of them in North America, will receive details starting today of the three packages, including a rare cash buyout option that could prove welcome as 29 percent of the company's salaried workers find themselves unemployed heading into the holiday season.

Spokeswoman Shawn Morgan said the cuts to the white-collar ranks include an undisclosed number of supplemental or contract workers. There is no guidance as to whether some departments have been targeted more heavily, or spared, as Chrysler works to dramatically cut capital spending. But the focus will be on cutting or eliminating overhead and discretionary expenses that are not connected to major product programs. She could not say if the overall product capital budget will be reduced.

Chrysler LLC Chairman and CEO Robert Nardelli broke the news in a letter to employees this morning, beginning with: "These are truly unimaginable times for our industry." Troubled economic markers have led to a contraction of auto sales at "such a fast rate," Nardelli said, forcing the automaker to rightsize its operations.

Voluntary severance programs will be available starting in November, and take effect Nov. 30. Involuntary measures would follow, taking place by year's end.

The basic Separation Incentive Program (SIP) consists of $50,000 in cash and a vehicle voucher valued up to $25,000, as well as 100 percent health-care eligibility credits. The SIP is offered to employees aged 60 or older with 10 or more years of service as of Nov. 30.

A Special Early Retirement (SER) plan is available to white-collar workers aged 51 to 62 (previous plans started at age 53) who have 10 or more years of service, making less than $100,000, as well as to select employees aged 53 to 62 (previous plans started at age 55) with 10 or more years of service who earn more than $100,000. This plan offers full retirement benefits (not reduced for age) and 100 percent health care eligibility credits.

In an unusual step, Chrysler is offering Voluntary Incentive Buyouts (VTIPs) for employees with less than 10 years of service as of Nov. 30. They still can leave with $50,000 in cash, a voucher worth $25,000 towards the purchase of a vehicle, and six months of health-care coverage.

Employees with more than 10 years of service who are not eligible for the separation or early retirement programs can leave the automaker with $75,000 in cash, the vehicle voucher, and six months of health-care coverage.

The voluntary incentive program is being offered for the first time since 1991 -- previously considered the worst year ever for the domestic auto industry, with reported Big Three losses of $7.5 billion.

While the programs have been enhanced, involuntary layoffs are considered inevitable. Chrysler last announced 1,000 white-collar cuts in July, an action that was completed at the end of September, but which required 15 percent to 20 percent involuntary cuts to reach the company's goal.

Chrysler's majority owner, Cerberus Capital Management LP, has been in talks with General Motors Corp. and Renault-Nissan about strategic alternatives for Chrysler, including a GM-Chrysler merger.

Chrysler's statement Friday was the strongest acknowledgement to date that changes are coming, adding "that Chrysler would make additional organizational and restructuring announcements in the near future as the Company works to find new ways to operate." Nardelli's memo to employees conceded, "we cannot operate as we have in the past."




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Chrysler Cuts 25% Of It's White Collar Workforce

Chrysler to cut 5,000 white-collar workers

Alisa Priddle and David Shepardson / The Detroit News

Chrysler LLC plans to cut 5,000 of its 17,300 salaried and contract workers worldwide by Jan. 1, a deep cut that cannot be done without some involuntary layoffs, say company officials and Michigan congressional aides briefed on the matter.

The employees, about 95 percent of them in North America, will receive details starting today of the three packages, including a rare cash buyout option that could prove welcome as 29 percent of the company's salaried workers find themselves unemployed heading into the holiday season.

Spokeswoman Shawn Morgan said the cuts to the white-collar ranks include an undisclosed number of supplemental or contract workers. There is no guidance as to whether some departments have been targeted more heavily, or spared, as Chrysler works to dramatically cut capital spending. But the focus will be on cutting or eliminating overhead and discretionary expenses that are not connected to major product programs. She could not say if the overall product capital budget will be reduced.

Chrysler LLC Chairman and CEO Robert Nardelli broke the news in a letter to employees this morning, beginning with: "These are truly unimaginable times for our industry." Troubled economic markers have led to a contraction of auto sales at "such a fast rate," Nardelli said, forcing the automaker to rightsize its operations.

Voluntary severance programs will be available starting in November, and take effect Nov. 30. Involuntary measures would follow, taking place by year's end.

The basic Separation Incentive Program (SIP) consists of $50,000 in cash and a vehicle voucher valued up to $25,000, as well as 100 percent health-care eligibility credits. The SIP is offered to employees aged 60 or older with 10 or more years of service as of Nov. 30.

A Special Early Retirement (SER) plan is available to white-collar workers aged 51 to 62 (previous plans started at age 53) who have 10 or more years of service, making less than $100,000, as well as to select employees aged 53 to 62 (previous plans started at age 55) with 10 or more years of service who earn more than $100,000. This plan offers full retirement benefits (not reduced for age) and 100 percent health care eligibility credits.

In an unusual step, Chrysler is offering Voluntary Incentive Buyouts (VTIPs) for employees with less than 10 years of service as of Nov. 30. They still can leave with $50,000 in cash, a voucher worth $25,000 towards the purchase of a vehicle, and six months of health-care coverage.

Employees with more than 10 years of service who are not eligible for the separation or early retirement programs can leave the automaker with $75,000 in cash, the vehicle voucher, and six months of health-care coverage.

The voluntary incentive program is being offered for the first time since 1991 -- previously considered the worst year ever for the domestic auto industry, with reported Big Three losses of $7.5 billion.

While the programs have been enhanced, involuntary layoffs are considered inevitable. Chrysler last announced 1,000 white-collar cuts in July, an action that was completed at the end of September, but which required 15 percent to 20 percent involuntary cuts to reach the company's goal.

Chrysler's majority owner, Cerberus Capital Management LP, has been in talks with General Motors Corp. and Renault-Nissan about strategic alternatives for Chrysler, including a GM-Chrysler merger.

Chrysler's statement Friday was the strongest acknowledgement to date that changes are coming, adding "that Chrysler would make additional organizational and restructuring announcements in the near future as the Company works to find new ways to operate." Nardelli's memo to employees conceded, "we cannot operate as we have in the past."




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GM-Chrysler merger and Cerberus--Very Little Options!

RPT-DEALTALK-Options scarce if GM-Chrysler merger talks fail

DETROIT, Oct 22 (Reuters) - As General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) pushes ahead with talks to acquire Chrysler LLC, uneasy suppliers and workers are bracing for a deal that would combine two struggling automakers and cost tens of thousands of jobs.

But as GM struggles to line up financing for an acquisition, attention has turned to an even more uncertain prospect: What happens if the controversial deal falls apart?

For Chrysler, owned for the past year by Cerberus Capital Management, the options are dwindling, according to bankers, consultants and experts on corporate strategy.

If GM pulls out, people briefed on the talks expect Cerberus to seek another buyer for the maker of Jeep, Dodge and Chrysler models. Failing that, Cerberus would likely look to break up Chrysler and sell whatever assets it could, they said.

"Selling off assets will only become strategy if GM is off the table and they have not found any other buyer," said one person familiar with the matter, who estimated the GM deal now has about a 1-in-3 chance of success because of difficulties in securing outside funding.

Another person familiar with Chrysler's planning said the automaker had drawn up scenarios that would involve selling key assets like the Jeep brand, its specialty parts business Mopar and even its engineering operations if Cerberus is pushed to break up the 80-year-old automaker.

Both GM and Chrysler have declined to comment when questioned about the merger talks. Both automakers have also ruled out bankruptcy as an option as they restructure......Read More

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