Kerkorian Makes Getaway

The billionaire reportedly dumps his entire stake in General Motors.
Author:
Publish date:

Updated from 5:59 p.m. EST

Kirk Kerkorian has slammed the hood on

General Motors

(GM) - Get Report

.

The Vegas mogul's investment firm, Tracinda Corp., reportedly dumped its entire stake in GM via a block sale of 28 million shares on Thursday.

The online version of

The Wall Street Journal

reported that Kerkorian sold the block to

Bank of America

(BAC) - Get Report

for $29.95 a share, according to a person familiar with the matter.

The 28 million shares represented Kerkorian's 4.9% stake in GM, which had recently been lowered from 7.4%, according to a filing released Thursday by the

Securities & Exchange Commission

. That level relieved the firm from disclosure requirements prescribed for stakeholders with positions of 5% or more.

It also marked the second time in just over a week that Kerkorian sold off a chunk of GM. Last Wednesday, Tracinda revealed that it cut its stake from 9.9% to 7.4%.

GM stock closed Thursday at $29.23, down 97 cents, or 0.9%.

Kerkorian's retreat from his bold investment in GM comes shortly after its representative on the automaker's board of directors, Jerry York, resigned his seat in protest after the company broke off talks with

Renault-Nissan

about a global partnership. Kerkorian had publicly expressed support for a deal.

York said in a resignation letter to GM that the company has made progress on its restructuring, but the overriding issue of its market-share declines have yet to be addressed properly. He said he has "grave reservations about the ability of the company's current business model to successfully compete in the marketplace with those of the Asian producers."

In many ways, Tracinda's support of the Renault-Nissan talks appeared to be motivated by a lack of confidence in GM CEO Rick Wagoner and his management team and a desire to bring in Carlos Ghosn, Renault-Nissan's flashy CEO, for new leadership.

That may have been a partial driver for Wagoner's apparent opposition to a deal. But under his leadership, GM's restructuring efforts gained traction this year, powering its stock to a gain of 67% so far in 2006 that leads the

Dow Jones Industrial Average

.

"Over the past 12 months, we have implemented several fundamental moves -- in health care, manufacturing capacity, hourly attrition, salaried and executive headcount and benefits, asset sales and liquidity enhancements, acceleration of key product launches, introduction of the industry's best warranty and completely revamping our marketing strategy," the company said in a press release responding to York's resignation.

While GM's management can take credit for its progress, the fact remains that pressure exerted by Kerkorian early this year played a role in getting the company moving. Tracinda's presence at the company has served as a linchpin for many of the bullish arguments for GM on Wall Street.

Some investors speculated York's departure would lead to a proxy fight against GM's management waged by Tracinda, but the firm's rapid-fire selling of its stake in the last few weeks suggest Kerkorian is throwing in the towel.

He originally bought the stock through a tender offer at $31 a share, so he is recording losses on his investment.

Meanwhile, GM announced Thursday that it completed the sale of a majority stake in its finance subsidiary, GMAC. It expects to reap $14 billion in net cash proceeds and distributions over three years from the deal.

GM struck a deal to sell a 51% stake in GMAC to a private-equity group led by Cerberus Capital in April in order to raise cash for its restructuring.