May 8 (Bloomberg) -- OppenheimerFunds Inc., the only mutual fund manager listed among opponents of the U.S. government’s restructuring plan for Chrysler LLC, dropped out of the effort, precipitating the collapse of the dissident lenders’ group.
The $1.3 billion Oppenheimer Senior Floating Rate Fund, whose stated goal is to preserve investors’ capital, bought $83 million of the debt. It was the fund’s third-largest holding as of Jan. 31. OppenheimerFunds also bought the debt for other funds and ultimately held about $100 million.
The Chrysler investment pitted OppenheimerFunds’ fund co- managers Joseph Welsh and Margaret Hui, along with hedge funds and distressed debt investors, against President Barack Obama, who blamed the holdouts for forcing the automaker into bankruptcy on April 30. Their continued opposition threatened plans to sell the automaker’s assets to Fiat SpA.
“It’s a surprise that Oppenheimer was in there,” Geoff Bobroff, president of Bobroff Consulting Inc. in East Greenwich, Rhode Island, said in an interview. “The mere fact that it was a distressed investment doesn’t preclude them from investing, but I don’t view Oppenheimer as a distressed investor.”
OppenheimerFunds, an asset-management unit of Massachusetts Mutual Life Insurance Co. of Springfield, Massachusetts, accumulated the debt beginning in the first half of 2008 after banks sold it for below 70 cents on the dollar. Chrysler’s loan is now valued at 27 cents on the dollar. The Oppenheimer Master Loan Fund LLC also bought $11 million of the debt at distressed prices, filings show.
