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Billionaire Investor Retreats From G.M. Alliance
By NICK BUNKLEY
New York Times
October 6, 2006
DETROIT, Oct. 6 -- Jerome B. York, an adviser to the billionaire
investor Kirk Kerkorian, resigned from the board of General Motors
today, and condemned the company's management and its ability to
overhaul the company in his letter of resignation.
After Mr. York informed G.M. that he was quitting, Mr. Kerkorian said
he no longer wanted to increase his stake in the company beyond the
9.9 percent he has now.
The moves came two days after talks collapsed among General Motors,
Renault and Nissan over a global alliance -- talks that Mr. Kerkorian
instigated and that he pushed the reluctant management of General
Motors into joining.
Investors bid General Motors stock down sharply on today's news, with
the shares trading as much as 7 percent lower early in the afternoon
on the New York Stock Exchange. The market reaction cut the value of
Mr. Kerkorian's 56 million G.M. shares by more than $100 million.
Mr. York, in his letter to G.M., said he reached the conclusion that
the company's other directors were not willing to challenge executives
on the company's strategies. He said the company was being too timid
in confronting its problems.
"I have grave reservations concerning the ability of the company's
current business model to successfully compete in the marketplace
with those of the Asian producers," Mr. York wrote in the letter,
a copy of which was obtained by The New York Times.
General Motors spokesmen did not immediately return calls this
afternoon seeking comment. Mr. York criticized G.M. for not obtaining
an independent analysis of an alliance's potential value before
backing out of the talks on Wednesday. But he attributed his decision
to resign primarily to the environment in the boardroom, rather than
the company's reluctance to more fully pursue the alliance proposal.
G.M., which lost $10.6 billion last year but posted an operating profit
in the second quarter of this year, insists that its own turnaround
plan is gaining traction and that it would not be helped and might
be hindered by an alliance.
Rick Wagoner, the chief executive of the company, has said it would not
benefit from a deal with Renault and Nissan as much as its prospective
partners would, and wanted billions of dollars paid up front to General
Motors in compensation. That demand apparently killed the talks.
Analysts suggested that Mr. Kerkorian may now be preparing to wage a
proxy fight against G.M.'s management. If Mr. York, a longtime adviser
to Mr. Kerkorian, remained on the board, he would be restricted in
the part he could play in any hostile moves Mr. Kerkorian made.
A week ago, Mr. Kerkorian said that he was interested in buying 6
million to 12 million more G.M. shares, increasing his stake in the
company to about 12 percent. He backed off that statement today in a
regulatory filing, but noted that his investment company, Tracinda
Corporation, "will continue to review their investment in General
Motors," and may decide to buy or sell additional shares based on
the company's performance and other factors.
Copyright 2006 The New York Times Company
From: Emil Lazarian | Ararat NewsPress
By NICK BUNKLEY
New York Times
October 6, 2006
DETROIT, Oct. 6 -- Jerome B. York, an adviser to the billionaire
investor Kirk Kerkorian, resigned from the board of General Motors
today, and condemned the company's management and its ability to
overhaul the company in his letter of resignation.
After Mr. York informed G.M. that he was quitting, Mr. Kerkorian said
he no longer wanted to increase his stake in the company beyond the
9.9 percent he has now.
The moves came two days after talks collapsed among General Motors,
Renault and Nissan over a global alliance -- talks that Mr. Kerkorian
instigated and that he pushed the reluctant management of General
Motors into joining.
Investors bid General Motors stock down sharply on today's news, with
the shares trading as much as 7 percent lower early in the afternoon
on the New York Stock Exchange. The market reaction cut the value of
Mr. Kerkorian's 56 million G.M. shares by more than $100 million.
Mr. York, in his letter to G.M., said he reached the conclusion that
the company's other directors were not willing to challenge executives
on the company's strategies. He said the company was being too timid
in confronting its problems.
"I have grave reservations concerning the ability of the company's
current business model to successfully compete in the marketplace
with those of the Asian producers," Mr. York wrote in the letter,
a copy of which was obtained by The New York Times.
General Motors spokesmen did not immediately return calls this
afternoon seeking comment. Mr. York criticized G.M. for not obtaining
an independent analysis of an alliance's potential value before
backing out of the talks on Wednesday. But he attributed his decision
to resign primarily to the environment in the boardroom, rather than
the company's reluctance to more fully pursue the alliance proposal.
G.M., which lost $10.6 billion last year but posted an operating profit
in the second quarter of this year, insists that its own turnaround
plan is gaining traction and that it would not be helped and might
be hindered by an alliance.
Rick Wagoner, the chief executive of the company, has said it would not
benefit from a deal with Renault and Nissan as much as its prospective
partners would, and wanted billions of dollars paid up front to General
Motors in compensation. That demand apparently killed the talks.
Analysts suggested that Mr. Kerkorian may now be preparing to wage a
proxy fight against G.M.'s management. If Mr. York, a longtime adviser
to Mr. Kerkorian, remained on the board, he would be restricted in
the part he could play in any hostile moves Mr. Kerkorian made.
A week ago, Mr. Kerkorian said that he was interested in buying 6
million to 12 million more G.M. shares, increasing his stake in the
company to about 12 percent. He backed off that statement today in a
regulatory filing, but noted that his investment company, Tracinda
Corporation, "will continue to review their investment in General
Motors," and may decide to buy or sell additional shares based on
the company's performance and other factors.
Copyright 2006 The New York Times Company
From: Emil Lazarian | Ararat NewsPress