HARRISBURG —
HARRISBURG - The two pension funds serving Pennsylvania state employees had a combined $10 million invested in a company that manufactured one of the weapons used to kill elementary school children in Connecticut.
The Public School Employees Retirement System in Pennsylvania had expressed concern to Cerberus Capital Management about its stake in Freedom Group International, the company that makes Bushmaster rifles, said Evelyn Tatkovski, PSERS spokeswoman.
As of Tuesday, approximately $8.2 million of PSERS’ funds were invested by Cerberus in the Freedom Group, she said. The school employees pension has 600,000 members.
“While a limited partner, like PSERS, does not have the authority to purchase or sell partnership portfolio companies, PSERS did contact Cerberus (Monday) to express our concern over its investment in the Freedom Group,” Tatkovski said.
“SERS has an interest in Cerberus Capital Management affiliates that includes approximately $1.9 million in investments associated with Freedom Group Inc., a firearms conglomerate that we understand produces Bushmaster rifles,” said Pamela Hile, spokeswoman for SERS, the pension system.
The pension system serves 228,000 members, among them 107,000 current state government employees, including state police troopers.
Cerberus Capital Management said Tuesday it will sell its controlling stake in Freedom. Investors also continued to bail out of other gunmakers while the retailer Dick’s Sporting Goods said it would stop selling military-style rifles.
“SERS appreciates Cerberus’ quick, empathetic and human response to this tragedy,” Hile said.
“Every person at the Pennsylvania State Employees’ Retirement System is deeply saddened by the Sandy Hook tragedy,” Hile said. “We cannot comprehend the horror or pain being experienced by that community. Our thoughts and prayers are with them.”
Tatkovski expressed similar sentiments.
“Along with the entire country, PSERS’ board and staff are deeply saddened by the horrific events that occurred last Friday at the Sandy Hook Elementary School,” she said. “Our thoughts and prayers remain with those impacted by this terrible tragedy.”
Cerberus cobbled Freedom Group together by buying Bushmaster, Remington and other well-known gun brands starting in 2006. On Friday, a gunman using what is believed to have been a Bushmaster military-style rifle killed 26 people at Sandy Hook Elementary School in one of the worst mass shootings in U.S history.
“It is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level,” Cerberus wrote in announcing the planned sale. Cerberus owned 95 percent of Freedom Group, according to a year-end 2011 filing for the gunmaker on its website.
Freedom Group said it is the largest firearms manufacturer in the United States. It sold 1.1 million rifles and shotguns last year, along with 2 billion rounds of ammunition. Its products are sold to law enforcement and military customers, as well as retailers who sell them to hunters and gun enthusiasts.
The so-called Assault Weapons Ban that expired in 2004 restricted the sale of some types of guns like those made by Bushmaster. Freedom Group noted in its filing that new laws along the lines of the expired assault weapons ban “could have a material adverse effect on our business.”
Cerberus attempted to distance itself from that debate on Tuesday.
The sale may have been influenced by one or more of those clients. The announcement comes one day after the California State Teachers Retirement System, a large pension fund, told The Wall Street Journal that it was reviewing its $500 million investment commitment to Cerberus because of the firm’s stake in Freedom Group.
Money made from the Freedom Group sale will be returned to its investors, Cerberus said.
The Associated Press contributed to this article.
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