Cerberus Capital Management LP has chosen investment bank Lazard to do an auction for Freedom Group Inc., the buyout firm is determined to sell its gun manufacturer group, after the shooting storm at a Newtown, Conn. School resulted in a lot of negative press about the company.

Cerberus Capital Management

Cerberus would like to procure another global bank to take the process ahead with Lazard Ltd (NYSE:LAZ) and is already in talks with various banks. Cerberus desires to initiate an auction for the sale of Madison, N.C. based Freedom Group as soon as possible after the New Year, though the sale process can stretch up to several months.

Cerberus insist on parting with Freedom Group, following Connecticut shooting earlier this month, when, authorities say, Adam Lanza used a Bushmaster rifle manufactured by Freedom Group to kill 20 students and six adults at the Sandy Hook Elementary School.

Within hours of shooting at Sandy Hook Elementary School in Connecticut, executives at Cerberus Capital Management LP were gathered at the company’s New York headquarters to plan the future course. The buyout firm owns Freedom Group Inc., one of the nation’s largest makers of guns and ammunition.

Cerberus has long warned of stakes with the gun business. In a 2009 public filing for an initial public offering, Cerberus said that a boost in government regulation, such as imposing bans on “assault rifles” or “armor piercing” bullets, could impair its sales. The company postponed its plans to go public in 2011. Since then, Cerberus has been working to maintain the business through cost-cutting and management changes.

As per a filing, the maker posted a loss in four of the five years since its establishment in 2007. Its margins also lag well behind those of rivals. So far this year till September, the company has shown marginal profits.

Cerberus entered the fire arm business in 2006, after it acquired Bushmaster Firearms International. Among other acquisitions, Cerberus and its affiliates bought Remington Arms Co., the country’s largest and oldest maker of rifles and shotguns. The company consolidated its gun holdings in 2007 under the name Freedom Group, whose legal name was changed in October to Remington Outdoor Co.

Founded in 1992 by Mr. Feinberg, Cerberus was a successful but the little-known Wall Street investment firm until 2007, when it acquired Chrysler LLC, the big Detroit auto maker. The popular deal gained more attention when Chrysler had to be bailed out by U.S. taxpayers in 2008. Another Cerberus investment, the auto-lending company GMAC LLC, also required a taxpayer bailout.