NEW YORK, Dec. 18, 2012 /PRNewswire/ — 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.

PR Newswire (http://s.tt/1xfl8)

31 Responses to Cerberus Statement on Selling Freedom Group

  1. So to paraphrase, “as much as we like making money, as much money as we are making, we need to cover our asses more from the political and PR fallout, when this all calms down, perhaps we will invest again.”

    • That’s not how I read it. I read it as, holy crap there is a lot of uncertainty in this industry and that does not make for good investments. We cannot accurately predict the future of this company or its industry well enough to make money off it. It is too risky of an investment and we need to bail.

      • Chewbacca nailed it. Companies like Cerberus are in it for the money. If it won’t make them money, or worse, if it will cost them money, they will run from it like a scalded cat.

        • That’s total BS. All of the brands in the Freedom Group portfolio have had record profits over the last couple of years. They aren’t going to sell their investment in FG before any new legislation will be passed.

          This is totally a PR move.

      • chewbacca, right on!

        i personally think theyre preparing for the worst and trying to come out smelling like a rose (nope…nothing to do with guns now people!)

    • Not quite. more like, We have determined that the risk of future losses in this market due to shifting public opinion necessitates our selling off our holdings while profits are maximized.

  2. That press release pretty well lays out their perfectly legitimate reasoning.

    See, here’s the thing about people (Corporations are people, my friend) who always act in their own self-interest. They always act in their own self-interest.

    At least there’s a certain predictability there.

  3. This seems like a rational response to me. They owe a duty of care to their investors, and they are taking action now to avoid the risks that they see ahead. Others, perhaps those who are less risk-averse and/or more ideologically motivated, can take advantage of this opportunity.

    As a consumer, I would love to see a world where all these brands are operating independently again and in competition with each other.

  4. “There are, however, actions that we as a firm can take.”

    Such as vilifying the industry.

    Well, if that’s the way they want to interpret it… Be sure not to give Cerberus any of your business in the future. They have been profiteering from the money that their MERCHANTS OF DEATH have been reaping, after all, and thus Cerberus is clearly evil for doing so.

  5. OK guys, for those of you who don’t follow the financial industry that closely, here’s what’s going on:

    CalSTRs, the California teachers’ pension fund, said that it would ‘review’ it’s invested money with Cerberus after the shootings.

    CalSTRs, last I knew, had $0.75 billion under management with Cerberus. For a company that manages about $20B, that would be a big hit and probably cause them to have to liquidate something to cash out CalSTRs investments – so they’re caught between selling something to cash out CalSTRs, or selling FG to prevent CalSTRs from leaving. The cost would be on par either way.

    Keeping FG means that they might have lawsuit costs coming down the pike.

    So from their perspective, they’re going to sell FG.

    Now, the problem is that there’s no one really big enough to buy the whole of FG. There are companies that might buy Barnes, there are companies that will buy other pieces (I wonder who might pick up Dakota) – the Remington piece is the biggest and hardest to find a buyer for.

    This, BTW, will continue Cerberus’ horrible track record with big investments. If you’re a rich person and you’d like to watch a bunch of your money disappear, place it with Cerberus.

  6. “We feel gun control is now inevitable and we will lose all the money we’ve made over the past five years if we don’t butcher this goose now. So in the interest of our investors, we’re going to get while the gettin’ is good.”

    This is as sure an indicator of impending gun control as we’ve witnessed thus far. Cerberus makes a lot of money by accurately predicting the future.

  7. “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.”
    — That is also the job err duty of free citizens in a democratic-republic.

    Cerberus continues to own DynCorp which receives almost all its money from the USG doing military support and ‘intelligence-type’ special operations. If you want to know who might be involved in door to door gun confiscation and other operations against American citizens it could be firms like DynCorp and Blackwater.

  8. Translation: we were losing our shirts anyway and since Colt just won its case before the GOA and we can’t sell our crappy guns to the Army, we’re out of here.

    Buh-bye, Cerberus. Don’t let the Colt smack you on the a$$ on the way out.

  9. “The debate essentially focuses on the balance between public safety and the scope of the Constitutional rights under the Second Amendment.”

    This is a red-herring! It is the Constitutional Right that guards public saftey – there is no balance, they are one and the same.

  10. I read this as “Our investors don’t like guns and if we don’t get rid of Freedom Group, we are afraid we will lose them. So, in the interest of keeping money funneling in, we are getting rid of the firearms company because we care more about money than the Constitution.”

  11. See? Something good WILL come out of this. The Freedom Group will be forced to spin off at least some of its components back into independent companies, at which point they could go back to building quality products.

  12. I just had a brilliant idea. Since Cerebus is getting rid of the Freedom Group, us gun owners should band together and try to purchase a manufacturer or two from them. If we got enough of us together, we could try to buy Remington or another company and fix the QC problems they have had. Wouldn’t everyone here love to own a piece of a gun manufacturer? We would probably make a lot of money too.

    • Casey:

      You can buy a piece of a gun manufacturer – RGR, SWHC, FTJA4. Whether you make any money or not is a different story.

      • I don’t know the last symbol but that wasn’t my point. What I meant is to do so with private equity as publicly traded companies have a lot more issues. I mean that we, the gun owners get together and buy it without it going public. We would have a lot more control, keep costs lower, have a lower tax expense, etc.

  13. Just a REMINDER OF THE JOE BIDEN KIND…This is a Big F’g Deal….The CEO of Freedom Group George Kollitides, ALMOST got onto the NRA Board of Directors. Let me point you to the TTAG point from a while back….This is the danger of electing industry people to the NRA. Of having businessman shape our 2A rights. They have NO allegiance to us. They are after the almighty dollar not our FREEDOM. Make sure that you remember this come voting for the BOD.

    http://www.thetruthaboutguns.com/2012/03/robert-farago/george-kollitides-on-the-right-appoints-himself-freedom-group-ceo/

  14. If they were truly invested solely in the financial interests of their investors then they would wait until after this huge rush on “assault weapons” tapers off either after an AWB or after one fails to happen.

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