Wednesday, April 30, 2008

Blackwater for sale?

On the same day it was revealed that Blackwater USA Worldwide and Cerberus Capital Management were in negotiations, the news came out that the talks were over and there would be no deal. Blackwater's capacity for generating negative attention didn't appeal to either the founder or the investors.

The reclusive founder of Cerberus, Stephen Feinberg, reportedly told his investors in a letter earlier this year that he hated all the attention the company was getting.

"We do our best to avoid the spotlight," wrote Feinberg, "but unfortunately, when you do some large deals, such as Chrysler and GMAC, it is hard to avoid."

Owning control of Blackwater would certainly have attracted even more attention to Cerberus. Blackwater has been accused of tax fraud, improper use of force, arms trafficking and overbilling connected to its work for the U.S. government in Iraq. A grand jury, federal prosecutors and congressional investigators are all currently probing allegations against the company.

Cerberus is kind of an interesting group in it's own right. They're a private investment/private equity group that purchases majority or large minority shares of companies that are teetering on the edge. Cerberus has owned all or part of Mervyns, Albertsons, Air Canada, and most recently, Chrysler. Former Treasury Secretary John Snow is the chairman, and former Vice President Dan Quayle is the chair of the advisory board. Donald Rumsfeld has been an investor.

It makes me wonder if Blackwater is suffering from some financial instability or excessive debt. That would be a typical scenario for Cerberus. They buy companies that are in financial distress, then they restructure, downsize, layoff, cut cut cut and make the place shiny so they can sell at a profit. Sometimes they succeed, and sometimes they don't. They make high risk investments. I guess Blackwater is even too risky for the risktakers.

Considering who's involved, I could get conspiracytheoristitis about that particular gang owning their own private military, but it's late and I'm not gonna go there.


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5/17/2008 12:18:00 AM  

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