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Newtown shooting: Cerberus to sell stake in firearms company Freedom Newtown shooting: Cerberus to sell stake in firearms company Freedom
(35 minutes later)
A US private equity firm is selling off its stakes in the firearms company that made the AR-15 rifle Adam Lanza used to shoot dead 20 children in a primary school last week. A US private equity firm is selling off its stakes in the firearms company that made the AR-15 rifle that was used to shoot dead 20 children in a Connecticut primary school last week.
Cerberus Capital Management said on Tuesday it was preparing to sell off its investment in gunmaker Freedom Group following mounting pressure from California's teachers' pension funds.Cerberus Capital Management said on Tuesday it was preparing to sell off its investment in gunmaker Freedom Group following mounting pressure from California's teachers' pension funds.
Cerberus, which manages more than $20bn (£12bn) of investments, said Lanza's massacre of 20 children and six adults was a "watershed moment" that had raised the debate on gun control to an "unprecedented level". Cerberus, which manages more than $20bn (£12bn) of investments, said Adam Lanza's massacre of 20 children and six adults was a "watershed moment" that had raised the debate on gun control to an "unprecedented level".
The investment fund said it was not its role to enter the debate but added: "There are, however, actions that we as a firm can take."The investment fund said it was not its role to enter the debate but added: "There are, however, actions that we as a firm can take."
"Accordingly, we have determined to immediately engage in a formal process to sell our investment in Freedom Group. We will retain a financial adviser to design and execute a process to sell our interests in Freedom Group, and we will then return that capital to our investors," it added."Accordingly, we have determined to immediately engage in a formal process to sell our investment in Freedom Group. We will retain a financial adviser to design and execute a process to sell our interests in Freedom Group, and we will then return that capital to our investors," it added.
"As a firm, we are investors, not statesmen or policy makers. Our role is to make investments on behalf of our clients who are comprised of the pension plans of firemen, teachers, policemen and other municipal workers and unions, endowments, and other institutions and individuals. It is not our role to take positions, or attempt to shape or influence the gun control policy debate. That is the job of our federal and state legislators." "As a firm, we are investors, not statesmen or policymakers. Our role is to make investments on behalf of our clients who are comprised of the pension plans of firemen, teachers, policemen and other municipal workers and unions, endowments, and other institutions and individuals. It is not our role to take positions, or attempt to shape or influence the gun control policy debate. That is the job of our federal and state legislators."
Cerberus, which was founded by Steven Feinberg, an avid shooter and hunter, said it was "shocked and deeply saddened by the shooting on Friday and it "cannot comprehend the losses suffered by the families and friends of those killed by the unthinkable crimes". Cerberus, which was founded by Steven Feinberg, an avid shooter and hunter, said it was "shocked and deeply saddened" by the shooting on Friday and it "cannot comprehend the losses suffered by the families and friends of those killed by the unthinkable crimes".
Cerberus, which bought an undisclosed stake in Freedom Group in 2006, said the firearms company does not sell weapons or ammunition to consumers and all sales are restricted to federally licensed firearms dealers. "We do not believe that Freedom Group or any single company or individual can prevent senseless violence or the illegal use or procurement of firearms and ammunition," it said. Cerberus, which bought an undisclosed stake in Freedom Group in 2006, said the firearms company did not sell weapons or ammunition to consumers and all sales were restricted to federally licensed firearms dealers. "We do not believe that Freedom Group or any single company or individual can prevent senseless violence or the illegal use or procurement of firearms and ammunition," it said.
In its latest financial statement Freedom Group boasts that it is the nation's largest manufacturer of military-style semi-automatics, which it calls "modern sporting rifles." In its latest financial statement Freedom Group boasts that it is the nation's largest manufacturer of military-style semi-automatics, which it calls "modern sporting rifles".
It said the market for those weapons, including the semi-automatic Bushmaster .223 rifle used by Lanza, grew by 27% between 2007 and 2011. "The continued adoption of the modern sporting rifle has led to increased growth in the long gun market, especially with a younger demographic of users and those who like to customize or upgrade their firearms," it added.It said the market for those weapons, including the semi-automatic Bushmaster .223 rifle used by Lanza, grew by 27% between 2007 and 2011. "The continued adoption of the modern sporting rifle has led to increased growth in the long gun market, especially with a younger demographic of users and those who like to customize or upgrade their firearms," it added.
Freedom said the increase in demand would have "significant long-term benefits" for the firm. It reported sales of $677m in the nine months to the end of September, a 19% increase on the same period a year earlier.Freedom said the increase in demand would have "significant long-term benefits" for the firm. It reported sales of $677m in the nine months to the end of September, a 19% increase on the same period a year earlier.
The company's semi-automatic rifles have been used in at least four high-profile mass shootings since 1999, including a 2009 incident that left 10 dead across southern Alabama, and a 2010 shooting spree in Virginia that killed eight people over 19 hours. A Bushmaster .223 rifle was used by the so-called Beltway snipers, John Allen Muhammed and Lee Boyd Malvo, who killed 15 people in 2001 and 2002. The company's semi-automatic rifles have been used in at least four high-profile mass shootings since 1999, including a 2009 incident that left 10 dead across southern Alabama, and a 2010 shooting spree in Virginia that killed eight people over 19 hours.
A Bushmaster .223 rifle was used by the so-called Beltway snipers, John Allen Muhammed and Lee Boyd Malvo, who killed 15 people in 2001 and 2002.
George Kollitides, a former managing director at the firm and one of the original Cerberus executives assigned to build Freedom Group, was appointed chairman and chief executive earlier this year. Kollitides had tried to run unsuccessfully for a seat on the board of the National Rifle Association, a powerful pro-gun lobby.George Kollitides, a former managing director at the firm and one of the original Cerberus executives assigned to build Freedom Group, was appointed chairman and chief executive earlier this year. Kollitides had tried to run unsuccessfully for a seat on the board of the National Rifle Association, a powerful pro-gun lobby.
The California State Teachers' Retirement System (CalSTRS), the second-biggest pension fund in America, had threatened to withdraw the $751m it had invested in Cerebus unless the private equity fund sold out of the firearms company.The California State Teachers' Retirement System (CalSTRS), the second-biggest pension fund in America, had threatened to withdraw the $751m it had invested in Cerebus unless the private equity fund sold out of the firearms company.
The California treasurer Bill Lockyer has said he will propose that CalSTRS and California Public Employees' Retirement System (CalPERS) – the two biggest pension funds in the US – sell off all investments in firearm manufacturers that make guns prohibited under state law. California prohibits semi-automatic assault weapons, specifically including the Bushmaster, and magazines that can hold more than 10 rounds of ammunition. The California treasurer Bill Lockyer said he would propose that CalSTRS and California Public Employees' Retirement System (CalPERS) – the two biggest pension funds in the US – sell off all investments in firearms manufacturers that make guns prohibited under state law. California prohibits semi-automatic assault weapons, specifically including the Bushmaster, and magazines that can hold more than 10 rounds of ammunition.