Cerberus Capital Management Statement is selling its interest in Freedom Group in response to the mass murder in Newtown, Conn., and pressure from one of its largest clients. Cerberus has significant investment from the California State Teachers' Retirement System (CalSTRS), one of the largest pension funds in the U.S.
According to Reuters, CalSTRS has invested $751.4 million in Cerberus. The fund's directors put out a statement Monday announcing that they are examining its investment in Cerberus.
Freedom Group is made up of Remington, Bushmaster Firearms, DPMS/Panther Arms, Marlin, H&R, The Parker Gun, Mountain Khakis, Advanced Armament Corp., Dakota Arms, Para USA and Barnes Bullets.
With the long-term outlook on the firearm industry a bit shaky at the moment, an equity firm would have to have steel balls to jump in on FGI now. I'm guessing FGI is about to get dismantled and its component companies sold off in different deals.
All of those companies are at risk of being sold well below their value. I am most interested in the fate of AAC, since its product portfolio contains a great deal of NFA devices that were already demonized.
Here is the release from Cerberus:
"We were shocked and deeply saddened by the events that took place at the Sandy Hook Elementary School in Newtown, CT on December 14, 2012. We cannot comprehend the losses suffered by the families and friends of those killed by the unthinkable crimes committed that day. No words or actions can lessen the enormity of this event or make a dent in the pain that was inflicted on so many."
"In 2006 affiliates of Cerberus Capital Management, L.P. made a financial investment in Freedom Group. Freedom Group does not sell weapons or ammunition directly to consumers, through gun shows or otherwise. Sales are made only to federally licensed firearms dealers and distributors in accordance with applicable laws and regulations. We do not believe that Freedom Group or any single company or individual can prevent senseless violence or the illegal use or procurement of firearms and ammunition."
"It is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level. The debate essentially focuses on the balance between public safety and the scope of the Constitutional rights under the Second Amendment. As a Firm, we are investors, not statesmen or policy makers. Our role is to make investments on behalf of our clients who are comprised of the pension plans of firemen, teachers, policemen and other municipal workers and unions, endowments, and other institutions and individuals. It is not our role to take positions, or attempt to shape or influence the gun control policy debate. That is the job of our federal and state legislators."
"There are, however, actions that we as a firm can take. Accordingly, we have determined to immediately engage in a formal process to sell our investment in Freedom Group. We will retain a financial advisor to design and execute a process to sell our interests in Freedom Group, and we will then return that capital to our investors. We believe that this decision allows us to meet our obligations to the investors whose interests we are entrusted to protect without being drawn into the national debate that is more properly pursued by those with the formal charter and public responsibility to do so."
"Our thoughts and prayers are with the families and communities impacted by this tragic and devastating event."
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"About Cerberus Capital Management, L.P."
"Established in 1992, Cerberus Capital Management, L.P. is one of the world's leading private investment firms. Cerberus has more than US $20 billion under management invested in four primary strategies: distressed securities & assets; control and non-control private equity; commercial mid-market lending and real estate-related investments. From its headquarters in New York City and large network of affiliate and advisory offices in the US, Europe and Asia, Cerberus has the on-the-ground presence to invest in multiple sectors, through multiple investment strategies in countries around the world."
