skunk
04-12-2010, 04:19 PM
Cerberus to acquire DynCorp for $1 billion (http://www.reuters.com/article/idUSTRE63B2IZ20100412)
It's amazing how fast these fuckers cut their own heads off, and grow a new one.
Corpwatch: DynCorp (http://www.corpwatch.org/section.php?id=18)
Corpwatch: US: DynCorp Disgrace (http://www.corpwatch.org/article.php?id=11119)
Sourcewatch: Dyncorp (http://www.sourcewatch.org/index.php?title=DynCorp)
Cerberus Capital Management LP CBS.UL said on Monday that it would buy defense contractor DynCorp International Inc (DCP.N) for about $1 billion in cash in one of the biggest leveraged buyouts of a publicly traded U.S. company since the global financial crisis.
Under the deal approved by DynCorp's board, shareholders will receive $17.55 in cash for each share of international common stock, a premium of about 49 percent from Friday's closing price of $11.75. Including the assumption of debt, the deal is worth about $1.5 billion.
DynCorp, whose customers include the U.S. Department of Defense and State Department, has a presence in Iraq and was chosen last year to support U.S. troops in the southern part of Afghanistan.
Shares of Falls Church, Virginia-based DynCorp, which had fallen 18 percent since the start of the year, were up 48.3 percent at $17.43 on Monday.
The deal valuation is relatively attractive and suggests the stock's price on the public market was low, said Jefferies & Co Managing Director Joseph Vafi.
"Even at this valuation ... it would make some sense for another private equity player to take a run at it," Vafi said.
The takeover is the biggest leveraged buyout since the February acquisition of prescription drug sales data provider IMS Health Inc by private equity firm TPG TPG.UL and the Canada Pension Plan.
Cerberus said it would fund the deal with equity financing, as well as debt financing from Bank of America Merrill Lynch (BAC.N), Citigroup Global Markets Inc (C.N), Barclays Bank PLC (BARC.L) and Deutsche Bank Securities Inc (DBKGn.DE).
DynCorp said it expected the transaction to close in the second half of 2010, but it might solicit alternative proposals for a 28-day period. The deal carries a termination fee of $30 million, according to a filing with the U.S. Securities and Exchange Commission.
Analyst Phil Finnegan of Virginia-based Teal Group said the deal showed increased interest in mergers and acquisitions in the defense sector, especially by private equity firms.
Computer Sciences Corp (CSC.N) had bought DynCorp for $914 million in March 2003, Finnegan said, only to sell it to Veritas Capital, another private equity group, for $850 million in February 2005 after stripping out the information technology work it was interested in, Finnegan said.
He said the company was involved mainly in less-challenging service work, which may have been less appealing to strategic buyers in the defense sector.
Scott Amey, general counsel of Washington-based nonprofit watchdog group Project on Government Oversight, said he was concerned about the ability to monitor the company's activities on sensitive contracts like Army logistics in Afghanistan once it went private.
"It does raise red flags," Amey said. "The biggest concern for us is that it's going to take them out of making certain disclosures and reports with the Securities and Exchange Commission."
He said there were five instances of misconduct by DynCorp listed on POGO's database of federal contractors, including allegations of sex trafficking in Bosnia in the late 1990s. A DynCorp spokeswoman did not have an immediate comment on the allegations.
The U.S. Government Accountability Office last month upheld a protest by DynCorp against the U.S. Army's plan to award task orders for training Afghan police and other officials under earlier contracts.
The GAO, the congressional agency that reviews federal bid protests, had said it agreed with DynCorp that the training, logistics and other work exceeded the scope of the previous Army contracts, which focused on counter-narcoterrorism.
skunk
04-12-2010, 04:20 PM
This is the same company engaged in sex trafficking (http://www.chicagotribune.com/news/nationworld/chi-0512270176dec27,0,1632557.story) overseas.
Snow Crash
04-12-2010, 09:18 PM
If memory serves, they were also the parent corporation of or had links to Sandline International, who had numerous shady dealings over West Africa, including Sierra Leone. Its amazing what a country will pay in natural resources to hire a bunch of cuthroat motherfuckers...
Snow Crash
04-12-2010, 09:25 PM
This is the same company engaged in sex trafficking (http://www.chicagotribune.com/news/nationworld/chi-0512270176dec27,0,1632557.story) overseas.
Hmmm... I wonder if that is what the Channel 4 drama Sex Traffic (http://www.channel4.com/programmes/sex-traffic) was inspired by. It's the tale of two Moldovan sisters who are kidnapped and trafficked across Eastern Europe and into the Balkans, then on to Italy and the UK. They are tracked by a man who works for a human rights charity who tries to save them, and he makes some big waves for a multinational defence contractor whose employees are involved in the trafficking.
Warning: don't watch if you're easily upset. It's pretty fucking grim.
How Cerberus can buy anything after fucking up Chrysler and GMAC is beyond me.
I haven't really studied the Chrysler bail out, but i was under the impression Cerberus got wiped out
I guess I was wrong...but still it's fairly outrageous that a firm PRIVATE firm benefited from a tax payer bailout lives again to actually be able to buy something for a billion dollars.
Am I wrong about this?
Just how much money did the USA lose in the Chrysler deal?
Why wasn't a private hedge fund liquidated?
How Cerberus can buy anything after fucking up Chrysler and GMAC is beyond me.
I haven't really studied the Chrysler bail out, but i was under the impression Cerberus got wiped out
I guess I was wrong...but still it's fairly outrageous that a firm PRIVATE firm benefited from a tax payer bailout lives again to actually be able to buy something for a billion dollars.
Am I wrong about this?
Just how much money did the USA lose in the Chrysler deal?
Why wasn't a private hedge fund liquidated?
My neighbor is being liquidated by the government tomorrow. They'll liquidate us before they liquidate them.
They are the machines in the movie "The Matrix", we're the people in the pods.
http://s.wsj.net/img/wsj_print.gif
March 30, 2009, 5:44 PM ET
Cerberus’s Equity in Chrysler’s Auto Company to Be Eliminated
By Neil King Jr. and John D. Stoll
Cerberus Capital Management will lose its equity stake in Chrysler LLC’s struggling automotive company as a condition of the Treasury Department’s bailout deal with the U.S. auto maker, according to several people familiar with the matter.
The New York private-equity firm purchased an 80% stake in Chrysler in 2007, promising to bolster the auto maker’s performance by operating as an independent company. The plan, however, collapsed due to an unprecedented slowdown in the U.S. auto industry and a lack of capital at the auto maker to weather the storm.
One Obama administration official, speaking on the condition of anonymity, said Cerberus’s equity stake no longer holds value and said the firm’s ownership will come to an end. In term sheets released by the Treasury Department on Monday, the government said Chrysler’s restructuring “at a minimum will require extinguishing the vast majority of Chrysler’s outstanding secured debt and all of its unsecured debt and equity.”
Cerberus will maintain a controlling stake in Chrysler’s financing arm, Chrysler Financial, according to two people briefed on the plan. Cerberus will utilize the first $2 billion in proceeds from its Chrysler Financial holding to backstop a loan allocated to Chrysler automotive in December by the Treasury Department.
In December, when Chrysler was lobbying Congress for financial support, Cerberus said it would make considerable concessions in order to encourage the government to prop the auto maker up, including surrendering equity, foregoing profits and giving up board seats.
“A viable long-term restructuring of Chrysler’s auto manufacturing business will require concessions by all relevant constituencies,” Cerberus said in a statement at the time. “In order to achieve that goal Cerberus has advised the Treasury that it would contribute its equity in Chrysler automotive to labor and creditors as currency to facilitate the accommodations necessary to affect the restructuring.”
Cerberus still holds a portion of Chrysler’s secured debt, and that likely will also be restructured under new terms the Obama administration is laying out for Chrysler.
The Treasury Department lent Chrysler $4 billion in December, and is considering lending billions more to keep it afloat.
The move comes as Mr. Obama’s auto task force is looking to hammer out over the next 30 days an alliance between Chrysler and Italian auto maker Fiat LLC. The government is offering an additional $6 billion in capital if the two sides can hammer out an acceptable deal.
Fiat would take a stake in Chrysler in exchange for giving the auto maker technology, such as fuel-efficient car platforms and engines. Under the deal, Fiat would be required to build cars and engines in the U.S., and Chrysler would have to pay back the $6 billion before Fiat can take control of Chrysler.
http://blogs.wsj.com/autoshow/2009/03/30/718/tab/article/
Obama Vows Swift Overhaul As Chrysler Enters Bankruptcy
Union and Fiat Gain Major Stakes in Automaker; President Slams Holdout Creditors as 'Speculators'
By Peter Whoriskey, Brady Dennis and Kendra Marr
Washington Post Staff Writers
Friday, May 1, 2009
Chrysler, the nation's third-largest automaker, filed for bankruptcy protection yesterday, with President Obama promising that court relief would give the company a "new lease on life."
The administration's efforts to avert a bankruptcy filing were frustrated by some hedge funds, which Obama referred to as "a small group of speculators," that rejected the government's final offer to settle their claims against Chrysler out of court.
Now largely under government control, Chrysler will seek in court to strip itself of its overwhelming debts. Then, according to the administration plan, the company will get roughly $10 billion in new government aid and be merged with Italian automaker Fiat.
It is an ambitious corporate rehab project for any management team: Cerberus, the secretive private-equity firm, failed in recent years to revive the company after its ill-fated marriage to Germany's Daimler. The Obama administration's attempt similarly runs a number of risks.
While Obama promised a "quick" and "efficient" bankruptcy, and administration officials said they hoped it could be done in 30 to 60 days, many in the field warned that it could take much longer because of the size and complexity of the case. Each passing day could weaken the company's prospects if customers and suppliers shun the brand. Chrysler announced yesterday that it is stopping production across the country for 30 to 60 days to reduce inventories. Because the United Auto Workers renegotiated its contract, cutting supplemental unemployment benefits, workers affected by the shutdown will receive a portion of their regular pay.
Moreover, there is no guarantee that a slimmed-down, Fiat-managed company would fare significantly better than Chrysler has in the past against foreign competition such as Toyota and Honda, which essentially dethroned the American automakers years ago.
"For too long, Chrysler moved too slowly to adapt to the future, designing and building cars that were less popular, less reliable, and less fuel efficient than foreign competitors," Obama said. "That's part of what has brought us to a point where they sought taxpayer assistance."
The administration's efforts on behalf of Chrysler foreshadow what may be a vastly larger effort later this month, when it is scheduled to complete the makeover of American corporate icon General Motors (http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&mwpage=qcn&symb=GM&nav=el).
Like Chrysler, GM has been weakened by massive debt and propelled by the economic crisis to the brink of bankruptcy.
The dual rescues within the auto industry have placed Obama in the odd position of salesman-in-chief.
"If you are considering buying a car, I hope it will be an American car," Obama told a television audience yesterday.
He also noted, as showroom salesmen now do, that the government has guaranteed the warranties of both companies, so consumers can get full coverage even if one of them goes bust.
The government is also arranging a deal under which GMAC, the automaker's financing company, would provide loans for Chrysler dealers and car buyers, replacing Chrysler Financial, which will be shuttered. Both the Treasury Department and GMAC are trying to persuade two other federal agencies, the Federal Deposit Insurance Corp. and the Federal Reserve, to provide support to the company. So far neither has agreed.
For now, however, much of the administration's efforts have gone into reshaping Chrysler into a newly competitive corporate entity.
The automaker's current majority owner, Cerberus Capital Management, is relinquishing its entire stake in the company.
The new majority owner will be Chrysler's union retiree health fund, which would receive a 55 percent stake in the new company. Fiat would get a 20 percent stake, with its share potentially rising to 35 percent over time based on performance. The United States would take 8 percent, while the Canadian government, which is also providing financing, would receive 2 percent.
Chief executive Robert L. Nardelli, who was installed by former owner Cerberus, is stepping down, and Fiat's leadership will take over. Chrysler's board will include four representatives named by the U.S. government, three by Fiat, one by the union's health trust fund, and one by Canada.
Nardelli, who will return to Cerberus Capital Management as an adviser, said he has "no golden parachute."
"We did a heck of a lot to try to salvage this company," Nardelli said in a conference call with reporters yesterday.
Though Obama administration officials emphasized time and again that bankruptcy was not their preferred option, they said the filing was essentially provoked by a small group of Chrysler's creditors who refused to accept the government's out-of-court offers.
The president yesterday praised Chrysler's management, union workers and the majority of the company's lenders, led by J.P. Morgan, for their "unprecedented sacrifices." Those groups were willing to make concessions out of court, he said.
But a number of hedge funds and other investment firms, who had invested in loans to Chrysler, refused to accept the government's final offer of 33 cents in lieu of every dollar owed. Their rejection precipitated the bankruptcy filing, administration officials said.
Calling them a "small group of speculators," Obama said they "were hoping that everybody else would make sacrifices and they would have to make none. Some demanded twice the return that other lenders were getting."
"I don't stand with them. I stand with Chrysler's employees, and their families and communities."
A group of about 20 investment firms that declined to go along with the deal released a statement yesterday rejecting the government's characterization and criticizing the negotiating process.
The group did not identify its members, but sources said it includes Perella Weinberg, Stairway Capital and OppenheimerFunds.
The group said its members had been "systematically precluded" from engaging in direct negotiations with the government.
Those negotiations had been dominated by four large banks that own 70 percent of Chrysler's debt -- Goldman Sachs (http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&mwpage=qcn&symb=GS&nav=el), Citigroup (http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&mwpage=qcn&symb=C&nav=el), J.P. Morgan and Morgan Stanley. Each has received government bailout loans through the Treasury's Troubled Assets Relief Program.
"We have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds," the lenders said in a statement. "In its earnest effort to ensure the survival of Chrysler and the well-being of the company's employees, the government has risked overturning the rule of law."
One of the key aspects of the bankruptcy will be its duration, many analysts said, and administration officials promised a relatively quick one. They noted that most parties involved have already agreed to concessions.
But some bankruptcy specialists warned that the court process can be unpredictable and difficult to manage in the case of a company as vast as Chrysler. Fearing the worst, for example, the National Automobile Dealers Association, which represents Chrysler dealers, has hired law firm Arnold & Porter to protect dealer investments.
The administration's assertion that the bankruptcy could wrap up within 60 days "is something I would expect someone who has never been involved in a bankruptcy would say," said Jean Robertson, chair of business restructuring at Calfee, Halter & Griswold. "There is nothing typical about this case. It's like Frankenstein, and Frankenstein isn't pretty."
Richard C. Breeden, the former Securities and Exchange Commission chairman and court-appointed monitor of WorldCom during its massive bankruptcy, said the time spent under court protection may be less important than the quality of the results.
"One of the most devastating situations is when companies go into bankruptcy and don't cut deeply enough," he said, citing the example of US Airways. "That would be truly devastating here. If you don't use the tools of bankruptcy to cut enough cost and fail again, then your customer impact is vastly greater and you put yourself on a path to liquidation."
Jim Arrigo, owner of two Florida Chrysler dealerships and chairman of the national Chrysler dealer council, said that despite the bankruptcy filing, he remained "very optimistic."
"Unfortunately some people out there in the banking industry have not come to table," Arrigo said. "They alone are responsible for us going into this. But as long as we come out the other side, that's all that matters."
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/30/AR2009043001639_pf.html
Notice how the govt forced small lenders to take haircuts of 33 cents on the dollar.
But notice how no bank is being asked to take haircuts on their toxic assets that fucked everything up in the first place.