bloggingbuyouts

The Wall Street Journal is reporting that the sale of $12 billion in debt related to the Cerberus Capital purchase of Chrysler Group from DaimlerChrysler (NYSE: DCX) has been postponed. Apparently the debt underwriters -- 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 been unable to find buyers for the debt, which is part of a $20 billion loan package planned for Chrysler. The money will be used in Chrysler's production and finance operations.

This setback for the debt sale offers further evidence that liquidity is drying up and deals are becoming more expensive. Interest rates on these debt-fueled loans have been climbing rapidly, and are now headed toward 10% and higher. However, even at these rates, Cerberus's bankers had trouble finding buyers. As a result, the bankers will provide $10 billion in loans from their own pockets, with plans to sell the debt to the public at a later date. Cerberus and Daimler will kick in another $2 billion.

Cerberus and its bankers have stated that this financing problem will not delay the closing of the deal, which is scheduled for August 3.

Private equity operators are crossing their fingers. Will the debt markets have enough capacity to fund the billions and billions of recent buyout deals?

As a result of these concerns, there's quite a bit of attention on the massive deal for Chrysler, which is being spun off by DaimlerChrysler (NYSE: DCX). And according to a piece on Bloomberg.com, there are some bumps in the road.

On a $10 billion loan, the private equity firm Cerberus wanted to get a juicy rate of 3.25% above the London interbank rate. But there were not enough takers. So, the new offer is 3.75% over. And, as for another $2 billion loan, Cerberus tried to get 6% above Libor, but has now upped it to 7%.

This certainly seems reasonable. Despite the extreme liquidity in global markets, there are still limits.

Besides, Chrysler is not a slam dunk deal. The competition is brutal and the employee benefits are onerous.

Even so, it still looks like the deal is on track -- but it's not going to be cheap.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Over the past 50 years, Harman International (NYSE: HAR) has built a solid business in stereo and audio equipment. It's so good that KKR and GS Capital Partners have agreed to buy out the company for a cool $8 billion.

Harmon increased sales by 10% to $882.8 million in Q3 and earnings increased from $64 million, or $0.94 per share to $71 million, or $1.07 per share. The company has a variety of brands like JBL and Infinity and has major contracts with auto companies like DaimlerChrylser (NYSE: DCX).

Interestingly enough, Harmon shareholders have the opportunity to convert some of their shares into the private entity (there are 8.3 million shares available for this option). This is something that is fairly rare in the buyout world.

The deal also has a go-shop provision that allows Harmon to seek other bids.

In fact, the Street thinks the bid will increase. Harmon's stock is currently trading at $122.49, which is above the $120 buyout offer.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

With the Chrysler Group in play, the company's parent -- DaimlerChrysler AG (NYSE: DCX) -- is fielding a variety of big-money calls. The buzz is that private equity firms Blackstone Group, Cerberus Capital Management and Centerbridge Capital Partners are preparing bids.

But, hey, it's really not a mega auto deal without billionaire Kirk Kerkorian, right?

Well, today his investment firm, Tracinda Corp., made a $4.5 billion cash offer for Chrysler Group. According to the Wall Street Journal, he is even willing to make a good faith deposit for $100 million [subscription required].

Keep in mind that Kerkorian is a billionaire for a reason: He knows how to structure deals. So his offer comes with some conditions, one being that the Chrysler Group will need to strike a good deal with the UAW. Moreover, there needs to be a way to deal with the hot potatoes of pension and health-care liabilities.

I think I would want the same things if I were shelling out $4.5 billion.

It's also getting Wall Street excited -- as there may be real interest in Chrysler Group. DaimlerChrysler's stock was up as much as 4.9% to $84.75 on the news. DCX is now up 2.85% to $83.38.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Cerberus Capital Management, already invested in the automotive industry with its stake in GMAC purchased from General Motors Corporation (NYSE:GM) last year, is rumored to be one of the private equity firms considering buying the US car unit from DaimlerChrysler (NYSE:DCX). Adding fuel to the rumors: the company recently contracted with Wolfgang Bernhard, a former auto executive. His old boss? Among others, Chrysler.

Brett Hoselton, Keybanc Capital Markets analyst said in a note to investors that a "source" indicated that Cerberus and the Blackstone Group together are the "leading contenders" to purchase Chrysler Group from the global car company -- and that neither Apollo Management Group, Carlyle Group, General Motors, or Canadian auto parts company Magna International (all of which have been said to be looking over the books) are still likely candidates.

Cerberus and Blackstone are currently poring over Chrysler's books; Doug McIntyre brings up the question of whether the firms are running the numbers on selling off brands. That certainly makes sense; the two most popular ways to improve value in a company are to (1) cut costs and to (2) spin off units. I wonder whether Bernhard's specialty is more efficiencies or dealmaking?