Dec 15, 2008
Chrysler wasn’t the only company to be bought up, bled dry and tossed aside by Cerberus. Just two months ago, a Cerberus scam forced Mervyns to shut down the 177 department store chain and liquidate the company.
In 2004, Cerberus and other “investors” had bought the Mervyns chain from Target for 1.25 billion dollars, most of it borrowed. These money grubbers immediately took 58 million dollars out of the company in fees for themselves for closing the deal.
In its first year of operation under Cerberus, Mervyns made 50 million dollars gross profits. Cerberus and its partners paid themselves a one-time dividend from this money.
But Cerberus had bigger plans – dividing Mervyns in two parts. One part was a “real estate company” – owning the buildings and land where Mervyns did its business. The other was the retail business, which produced all the sales. The profits were made on retail but funneled right back to the real estate holding company – which in fact charged Mervyns retail more than it made in sales. Two hundred fifty million dollars went to Cerberus and friends from this scam.
Over 18,000 jobs have been lost, the last thing Cerberus took.