Cerberus recover about 90 percent of its initial investment

Cerberus Capital Management LP recover about 90 percent of its initial investment in Chrysler after the sale of the automaker's previous loan to Toronto-Dominion Bank, according to two people with knowledge of the transaction.

Cerberus will receive about 75 cents in cash when the sale of Chrysler Financial Corp. closes, said the people, who declined to be identified because the New York-based company is private. Including about 900 million Cerberus assets is maintained as part of the agreement, the company will retain a 10 per cent of the initial investment in the automaker and its finance arm.

Toronto-Dominion Bank agreed today to buy Chrysler Financial for $ 6.3 billion in cash, adding a self-financing company, in its second major acquisition. The purchase includes $ 5.9 billion in assets and about $ 400 million in goodwill. Cerberus, the hedge funds and purchase the company led by its founder, Stephen Feinberg, bought a majority stake in Chrysler for $ 7,400,000,000 of DaimlerChrysler AG in 2007, part of a bid by the U.S. auto industry which included the 2006 takeover of General Motors Corp. s auto lender.

Tenders preceded a decline in U.S. auto sales sending both automakers into bankruptcy. Feinberg, 50, then lost control of both GMAC and Chrysler and clung to Chrysler Financial. The lender paid their $ 1.5 billion U.S. bailout funds from the Treasury Department last year and in July he tried to return to large-scale loans. The automaker, known as the Chrysler Group LLC, is now controlled by managers of Fiat SpA

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Chrysler Financial, based in Farmington Hills, Michigan, has approximately 1,850 employees and has about $ 7.5 billion in loans at the close of the transaction, according to a Toronto-Dominion investor presentation released today. About 90 percent of loans are in the U.S., and 10 percent in Canada.

Toronto-Dominion is to recognize the net asset value of $ 5.9 billion in its own books, rather than the value of 5200 million dollars in Chrysler Financial, according to a person familiar with the transaction. Based on the value of Chrysler Financial, Toronto-Dominion is paying about 1.2 times book value, the source said.