The sale of $4 billion in debt supporting Cerberus Capital Management's purchase of Chrysler has been postponed. According to Bloomberg News via the New York Post, Cerberus's bankers could not sell the debt and so were forced to withdraw the offering. This is not the first time Chrysler buyout debt has failed to sell. Back in July, bankers were forced to postpone the sale of $12 billion in debt. According to Bloomberg, the bankers -- including J.P. Morgan Chase (NYSE: JPM), Citigroup (NYSE: C), Goldman Sachs Group (NYSE: GS), Bear Stearns (NYSE: BSC) and Morgan Stanley (NYSE: MS) -- have a new plan to sell that debt for 97.5 cents on the dollar.
No plans for repackaging this second round of debt have been announced. The failure once again to sell Chrysler debt raises serious questions about the viability of both the deal and the company. Back in July, John Snow, the Chairman of Cerberus, was quoted as admitting that "the market has lost some of its buoyancy," but he expected to sell all of the Chrysler debt: "We follow this closely, and the people handling the financing and dealing with the banks are committed, so we are confident that this will go through." No word from Snow this time around.
