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Private Equity Briefcase

By Kelly Holman, IDD Magazine

April 16, 2009

It's A Joke, Right?

Goodness sakes.

How can the consortium offer for General Motors' Saturn Distribution Corp., announced by a mysterious private equity firm named Black Oak Partners, be taken seriously?

A number of media outlets glommed onto the report as GM continued its tight wire walk to avoid the chasm of bankruptcy, which is fair enough. The fact that a financial sponsor would seek to buy the unit, which GM disclosed in February that it planned to sell or shut down, should attract attention. What private equity firm in its right mind would seriously make a run at the GM unit?

Apparently, the folks at Black Oak haven't paid much heed to veteran turnaround investor Cerberus Capital Management's challenges with Chrysler. Nor has the private equity group interested in Saturn outlined how it plans to fund its acquisition.

Black Oak representatives didn’t return calls seeking further details.

The firm’s press release, however, does a great job of explaining the strategic approach the investor group plans to take in running the distributor and retailer: "The nSDC (new Saturn Distribution Corp.) will leverage the strengths of the existing Saturn retail network and distribution management team to pursue opportunities created by the changing structure of the global auto industry. nSDC’s role will be product sourcing, quality assurance, distribution, competitive analysis/positioning and national branding."

It's just the usual hogwash, thank you very much. But, you have to give credit to the masterminds behind this strategic growth plan that will initially look to obtain vehicles from GM, though plans to ultimately "offer smaller, fuel-efficient vehicles from a range of manufacturers" for sale in Saturn’s 440-retail dealer network.

These vehicles, it turns out, will be sold under the no-hassle sales approach of the Saturn brand. Of course, don't multiple vehicles from an unidentified group of manufacturers dilute the brand proposition that "progressive consumers" have come to associate with Saturn?

I guess not.

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Kelly Holman

Kelly Holman is the assistant managing editor at Investment Dealers' Digest, where he writes about private equity and leveraged finance. Prior to joining IDD, he reported on leveraged buyout transactions, private equity fundraising activity, corporate auctions, the middle market and credit markets as a senior writer for The Deal. Before joining The Deal in 2000, Holman was a reporter for PRWeek magazine, where he reported on financial services PR and investor relation activities, as well as international PR developments. He also assisted with Haymarket Media Group's US launch of the public relations trade magazine. Previous to PRWeek, Holman wrote about private equity for Private Equity Week and Buyouts and served as a contributor to IDD in the late 1990's. A Colorado transplant, Holman has called New York home for more than a decade. He received his B.A. in Mass Communications from the University of Colorado at Denver..

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