Bloomberg – Cerberus Capital Management LP, the $27 billion investment firm founded by billionaire Stephen Feinberg, may use stakes in a new fund to pay investors seeking withdrawals from a hedge fund after redemptions surged.
Setting up a so-called special purpose vehicle to meet redemption requests from Cerberus Partners LP, which capped withdrawals in December after its assets slumped, is one option being considered by the New York-based firm, according to a March 27 letter to investors. The company may also pay withdrawals in cash within the one-year suspension period.
Cerberus, founded by former Drexel Burnham Lambert Inc. banker Feinberg in 1992, limited withdrawals from the hedge fund after it lost 16 percent in the year through November. The fund fell 3 percent to $1.99 billion in the first two months of 2009, according to the letter, a copy of which was obtained by Bloomberg. The surge in withdrawals and the creation of the new fund may result in investors waiting years to get their money.
