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Cerberus founder Stephen Feinberg looking for a bid for Freedom

After the incidents last week in Boston, Stephen Feinberg, owner of US gun maker Freedom Group is reportedly heating up his efforts to find a buyer for the group.

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SLUG: PH_AUTO DATE: December 11,    2008 PLACE: Washington,    DC

Stephen Feinberg / Getty


/ By Stanley Green /

Following the traumatic events last week in Boston, immediately followed by President  Barack Obama’s obvious anger at having the US Senate, in the same week, block consideration of his gun control bill that would have strengthened background checks for potential buyers.

These two incidents prompted Stephen Feinberg, of the Cerberus Private Equity Group, owners of the prominent US gun maker Freedom Group to renew his efforts to find a buyer for the company.

It was a Bushmaster rifle, manufactured by the Freedom group, that was used in the horrendous massacre in the elementary school situated in Sandy Hook. By a hugely ironic twist of fate, Stephen Feinberg’s father Martin lives in a suburb of the town just five minutes drive away from when the tragedy occurred in December of last year, in which twenty young children and six adults were massacred by a crazed lone gunman.

Almost immediately after the shooting occurred, Feinberg announced that the Cerberus would be putting the entire Freedom Group up for sale. However, as yet, few people have come forward to make a serious offer.

The Freedom Group is regarded as being the largest manufacturer of guns and ammunition in the United States, operating nine plants and employing three thousand people. The decision to sell off with a group of developing prompted by the reactions from some of Cerebus’s largest investors, particularly some of the United States public pension funds, who had hinted that they would reduce their investments in the group if they did not divest themselves of interest in firearm manufacturers. A particular bone of contention among those opposed to some aspects of the United States guns laws is the ability to warn semiautomatic weapons, such as the Bushmaster.

With the Freedom Group having an estimated value of around $1billion under normal circumstances. However even before the Boston Marathon massacre, the situation regarding weapons manufacture in the United States has become increasingly sensitive, a factor that market analysts have rushed to point out that may have prevented many potential buyers from making a move, amid increasing speculation that a number of the US’s  leading banks may well be wary of financing a purchase.

According to an official report, a number of interested parties have been given access to Freedom Group’s financial information, yet there is no sign of any firm offers being made for the group. While Feinberg is remaining tight lipped on his intentions, there is some speculation that he may have no alternative but to put the company through a form of formal auction process where it be solved to the highest bidder. In that case Feinberg will be taking a risk of being unable to set a reserve price on the company which he built up. Financial onlookers predict that potential buyers would be much more likely to prefer this route, as it would guarantee them some level of anonymity.

Stephen Feinberg was born and raised New York, going on after high school to attend Princeton University, from where he graduated with a degree in politics in 1982.

After graduating from college, Feinberg began his career in the financial world as a worked as a trader first with Drexel Burnham,   later moving on to Gruntal & Co, regarded as being among the most prestigious and certainly the longest running US independent investment banking houses.

Feinberg left Gruntal & Co in 1992 to form an investment house in partnership with William L. Richter, with their new enterprise going under the title of Cerberus Capital Management.

With a “war chest” of just $10 million under management to get them going, Cerberus Capital Management slowly and steadily built up a strong client following, with some of the credit due to Feinberg’s shrewd hiring of former Vice President Dan Quayle. Over the years, Cerberus Capital Management, with Feinberg and Richter firmly holding the reins, has grown to become a significant player in the capital management scene, currently managing assets of around $20 billion.



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