Cerberus’s Tower International may post a profit on its $106 million IPO

Article by Christian Andrei, on October 15, 2010

The initial public offering of Tower International Inc. for 6.250 million shares was priced at $13 a share – which falls below expectations. Tower International, the automotive supplier controlled by Cerberus Capital Management LP, said that the common stock will start trading Friday on the New York Stock Exchange under the symbol "TOWR".

The company gave a 30-day option to underwriters to buy an additional 937,500 shares of common stock on the same terms and conditions.

Cerberus, whose investment in Chrysler LLC's car business had dissipated due to bankruptcy last year, aimed to post a profit on Tower's $106 million initial public offering.

In 2007, Cerberus bought Tower, which makes hoods and doors for Volkswagen AG and Toyota Motor Corp. According to a Securities and Exchange Commission filing, Cerberus hoped to sell the shares at $15 to $17 each.

The filing showed that the midpoint price would value the private equity firm's $181.6 million stake at nearly $200 million. Cerberus’ investment was part of a $1 billion deal that had pulled Tower out of bankruptcy right before the credit crisis hit.

Cerberus is believed to take consolation from any profit from Tower after the company had given up its equity investment in Chrysler and relinquished most of its stake in General Motors Corp.'s GMAC LLC finance unit as part of government bailouts of the auto industry.

Tower, which had once been the largest maker of car and truck frames in the world, is hoping to end at least five years of losses as global auto sales increase toward a record in 2010. [via BusinessWeek]

Topics: ipo, united states

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