- The Washington Times - Monday, May 9, 2005

DETROIT (AP) — Billionaire investor Kirk Kerkorian went ahead yesterday with an offer to buy up to 28 million GM shares — a bid that would roughly double his stake in the automaker — despite last week’s downgrade of GM debt to “junk” status. Shares of the world’s largest automaker rose slightly.

Mr. Kerkorian’s investment firm, Tracinda Corp., is offering nearly $870 million, or $31 per share, according to documents filed with the U.S. Securities and Exchange Commission. If all 28 million shares are purchased, Mr. Kerkorian would own 8.84 percent of GM’s shares, or a total of 50 million. The offer is set to expire June 7, the day of GM’s annual meeting in Wilmington, Del.

Shares of General Motors Corp. closed up 57 cents, or 1.9 percent, to $31.33 yesterday on the New York Stock Exchange. The shares rose another 58 cents in after-hours trading.

GM’s stock price soared more than 18 percent last week when Mr. Kerkorian announced his plan, but the shares tumbled the next day when Standard & Poor’s Ratings Services downgraded GM’s debt to below investment grade. GM shares fell another 10 cents Friday to close at $30.76.

GM said yesterday it will review Mr. Kerkorian’s offer and file comments with the SEC by May 20, as required by law.

In its filing, Tracinda insisted it is acquiring the shares for investment purposes only and does not intend to acquire or influence control over GM’s business. But Mr. Kerkorian has never been known as a passive investor. The 87-year-old tycoon is in the middle of a five-year legal battle over terms of the 1998 merger of Daimler-Benz and Chrysler Corp. that formed DaimlerChrysler AG. Mr. Kerkorian was a major Chrysler shareholder.

“Unless he sees the money come in pretty quickly, he will become irritating,” said Gerald Meyers, a former chairman of American Motors Corp. who now teaches at the University of Michigan. “Everybody feels somewhat defeated by this turn of events. It’s a sad day for GM that this guy has come after them.”

Mr. Meyers added it’s not surprising Mr. Kerkorian went ahead with his offer despite the S&P; downgrade.

“He’s really committed,” Mr. Meyers said. “He has a track record, and when he decides to go after something, he goes after it.”

Tracinda didn’t address the downgrade in its statement yesterday, and a Tracinda spokeswoman didn’t return a telephone message seeking comment. Beverly Hills, Calif.-based Tracinda is the majority owner of casino and hotel operator MGM Mirage Inc.

Some analysts have suggested Mr. Kerkorian’s presence could light a fire under the struggling automaker. GM shares fell to a 10-year low in April after the company reported a $1.1 billion loss for the first quarter.

GM may be seeking some relief by increasing its hybrid vehicle offerings, though it denied an online press report that it is in talks with Toyota Motor Corp. about a technology-sharing agreement. Toyota also denied yesterday that the two companies are in talks, although the Japanese automaker said it is willing to discuss such a partnership.

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