Wall Street Firm Hasn't Sold Off AR-15 Maker Despite Newtown Promise
http://www.huffingtonpost.com/2013/09/24/cerberus-gunmaker-divestment_n_3983104.html?utm_hp_ref=business
Wall Street Firm Hasn't Sold Off AR-15 Maker Despite Newtown Promise
The Huffington Post | By Jillian Berman Posted: 09/24/2013 3:49 pm EDT | Updated: 09/24/2013 4:16 pm EDT
A coalition of advocates are urging a private equity firm to make good on its now nine-month-old promise to stop investing in gun makers.
Amid a flurry of media attention in the wake of the Newtown massacre that killed 20 children and six adults, Cerberus Capital vowed to sell of its controlling stake in the Freedom Group, a holding company that owns some of the biggest American gun manufacturers -- including Bushmaster, a maker of the AR-15, which was the Newtown murderer's weapon of choice.
"Cerberus Capital Management has not sold a single penny of its investment in Freedom Group. This is inexcusable and these delays can no longer be tolerated,” reads a letter delivered to Cerberus on Tuesday by Rep. Charles Rangel (D-NY), families of Newtown victims and other gun-control advocates who demand the company sell its stake in the Freedom Group in the next 30 days.
Many took Cerberus’ December announcement that it would stop investing in firearms as an indication that renewed vigor in the gun control debate made guns a riskier bet for Wall Street firms. Indeed, Cerberus initially had trouble finding potential buyers and the company’s CEO mulled putting up his own offer for the Freedom Group to ward off low bids. Ultimately, he dropped the plan as bids for the company started to roll in, the Wall Street Journal reported in July.
But as Quartz notes, Cerberus has likely been making money off of Freedom Group over the past nine months. As increased attention to gun control boosted sales, the Freedom Group reported a 51 percent increase in sales this year from second quarter 2012.
And thus Cereberus's limited partners discovered that doing what was promised cost money,
so it was not done.
In business, as in politics, 'tis better to watch what the hands do instead of
listening to what the mouth says...