Cerberus Might Not Sell Gunmaker

Dec 9 2013 | 11:02am ET

Following the tragic shooting at a Connecticut elementary school last year, Cerberus Capital Management pledged to sell gunmaker Freedom Group, which produced one of the weapons used in the massacre. But with the one-year anniversary of the killings approaching on Saturday, the private-equity firm may be backing away from that pledge.

Cerberus is reportedly seeking a new debt facility that would allow its investors to sell their portions of Freedom Group while Cerberus itself retains a majority stake. The mechanism would be financed by Bank of America Merrill Lynch, according to published reports.

It is unclear how, exactly, the mechanism would work, but Reuters reports that it will become clearer over the next few weeks whether Cerberus will use the credit facility to allow investors to exit or whether it will seek to sell Freedom Group outright.

Last year's shootings killed 20 children and six adults at the Sandy Hook Elementary School in Newtown. Four days later, Cerberus said it would sell Freedom Group, which made the Bushmaster rifle used by killer Adam Lanza, to "avoid being drawn into the national debate" on gun control.

Making good on that pledge has not proven easy. According to Reuters, banks have been reluctant to finance Freedom Group's sale, and Cerberus is afraid that the circumstances surrounding the sale could lead to lowball bids. Earlier this year, it was reported that Cerberus founder Stephen Feinberg and several other Cerberus partners were considering a bid for Freedom Group themselves.


In Depth

FINtech Focus: Fundbase Aims To Revolutionize Access To Hedge Funds

Jan 23 2015 | 11:03am ET

Global investment in financial technology—also known as fintech—is booming....

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

From Switzerland With Love: Some Hard Truths About Central Banks And Risk

Jan 23 2015 | 7:54am ET

In the wake of the Swiss National Bank uncoupling the country’s currency from...

 

Editor's Note