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Kerkorian ally York resigns from GM board, Tracinda backs off stock buy plan

Kerkorian ally York resigns from GM board, Tracinda backs off stock buy plan

A key adviser to billionaire investor Kirk Kerkorian resigned from the General Motors board, citing a board room environment unreceptive to extensive probing and "grave reservations" about GM's abilities against Asian competitors.
Kerkorian, meanwhile, signaled he would not acquire more stock in the world's biggest automaker after GM decided against pursuing an alliance with Renault and Nissan. He already controls 9.9 percent of GM shares and had recently indicated he was considering raising that stake to 12 percent.
The twin developments Friday, disclosed in a filing with the Securities and Exchange Commission, sent GM shares tumbling on the news, shaving $1.2 billion (euro950 million) off the company's value and about $116 million (euro91.6 million) off Kerkorian's stake. General Motors Corp. shares dropped $2.08, or 6.3 percent, to close at $31.05 Friday on the New York Stock Exchange.
The announcements also raised speculation about whether Kerkorian could start a proxy fight for control of the board.
Jerome York, a respected auto industry veteran, said in his resignation letter obtained by The Associated Press that he had "concluded there is little point in my remaining on the board." He said he had not "found an environment in the board room that is very receptive to probing much beyond the materials provided by management."
Citing a complaint raised by Kerkorian's private equity firm Tracinda Corp., York said the board should have hired its own independent advisers to evaluate the potential alliance. He did not appear optimistic about GM's future.
"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," wrote York, a consultant to Tracinda.
GM said in a statement that "under the direction of the GM board, we remain focused on our North America turnaround, where we are making real progress, progress that is well ahead of what some skeptics thought possible."
GM spokesman Brian Akre said 11 of the 12 board members are independent of management.
"They all have very impressive backgrounds in business. To suggest that they have not challenged and questioned our management is absolutely absurd," he said.
Some analysts said York's departure from the board gives Kerkorian more flexibility to pursue a number of options, which could include additional investments in the company or a proxy fight to wrestle control of the GM board.
"I suspect Mr. York is resigning at his instruction and it frees him from any charge that he has material nonpublic information," said John Coffee, a securities law expert at Columbia University.
Ronald Tadross, an analyst for Bank of America, said in a note to investors York's departure "could drive other GM board member departures. If this becomes the case, we may hold some hope for positive fundamental change at GM."
Kerkorian, the 89-year-old former owner of the MGM movie studio, owns his GM stake through Tracinda and has been pushing for more changes at GM. The automaker has said its own restructuring program, which includes job and plant cuts, is starting to show results.
Kerkorian had promoted the idea of the automaker joining forces with Renault SA and Nissan Motor Co. in a broad alliance and had told the SEC last week that he was considering increasing his stake in GM to as much as 12 percent.
But in a filing to the SEC on Friday, Tracinda said it no longer planned to acquire those shares but said it would continue to review its investment in GM and may decide "to acquire or dispose of additional shares."
Tracinda spokeswoman Carrie Bloom said the company would have no further comment.
GM, Nissan and Renault announced on Wednesday that they were ending their alliance talks. GM Chief Executive Rick Wagoner said the company believed it would benefit from the proposed linkup far less than Nissan and Renault, which already are joined in an existing alliance.
York, who served as chief financial officer at Chrysler Corp. and IBM Corp., had been on the GM board since February. Tracinda said following York's election that it had amended his consulting agreement to clarify that York wouldn't share any confidential information about GM with Tracinda.
Few analysts expect Kerkorian to walk away from GM quietly. He unsuccessfully tried to take over Chrysler for $23 billion in 1995, but the move was resisted by the automaker, which joined with Daimler-Benz AG three years later.
Kerkorian could seek a proxy fight against GM's management, or if he sought a more bolder move, attempt a hostile takeover of the company.
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Associated Press Writer Sarah Karush in Detroit contributed to this report.
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Updated : 2020-12-01 17:11 GMT+08:00