bloombergs bit on gm director resignation

bloomberg's bit on GM director resignation. watch gm as it's so big it's problems could effect bush and the us elections. gm and bush are both in big shyte. together they could fall. it's not out of the question. people once said rolls royce in uk would never fail. it did. got nationalised and finally split. it does happen. sure does.

40



Kerkorian Aide Quits GM Board After Alliance Fails (Update1)

By Doron Levin and Jeff Green

Oct. 6 (Bloomberg) -- Kirk Kirkorian said his aide Jerome York resigned from General Motors Corp.'s board and announced he wouldn't buy any additional shares in the world's largest automaker. GM shares dropped as much as 7.9 percent.

The billionaire investor, who owns 9.9 percent of GM, made the disclosures in a U.S. regulatory filing today. It follows the breakdown two days ago of talks he pushed for GM to form an alliance with Renault SA and Nissan Motor Co. GM spokesman Tony Cervone declined to immediately comment.

York, 68, departs after GM's directors signaled their continued backing for Chief Executive Officer Rick Wagoner's plan to cut $9 billion in costs by the end of this year and trim more than 30,000 U.S. union jobs. GM said on Oct. 4 that the vote by the directors was unanimous. York was named to GM's board in February after pushing to speed up efforts to recover from last year's $10.6 billion loss.

Kerkorian, GM's fourth-biggest investor, said in an Oct. 4 statement that he regretted the Detroit-based company's decision to reject synergies from the proposed alliance. Kerkorian holds the shares through his Tracinda Corp. Carrie Bloom, a Tracinda spokeswoman, didn't immediately respond to a call for comment.

``It is obvious from Tracinda's public comments that it believed a GM alliance with Nissan-Renault would have provided substantial synergies and cost savings, which conflicted with GM management's assessment,'' John Murphy, a Merrill Lynch auto analyst in New York who rates GM a ``buy,'' said in a note yesterday. ``Therefore, we believe that Tracinda may be focused on a significant management change.''

GM shares fell $2.54 to $30.59 at 12:34 p.m. in New York Stock Exchange composite trading, after dropping to $30.50.

Sparked Alliance Talks

Kerkorian sparked the alliance talks with a June 30 regulatory filing that revealed letters to Wagoner and Carlos Ghosn, chief of both Renault and Nissan. Those letters suggested that the French and Japanese automakers were interested in a ``significant minority interest'' in GM as part of partnership to help the U.S. company reduce costs.

Wagoner and Ghosn met July 14 and agreed to a 90-day study of the proposal. After a Sept. 27 meeting in Paris, they agreed to continue the talks until Oct. 15.

In a Sept. 28 U.S. regulatory filing, Kerkorian said his Tracinda Corp. might increase its GM stake by 12 million shares to show his support for the alliance idea. A purchase of that size would have boosted Kerkorian's holdings to 12 percent from 9.9 percent and made him GM's second-biggest shareholder.

Dispute Over Payment

On Oct. 4, the three companies said they decided to end the talks early because they couldn't resolve a dispute over GM's demand to be compensated for taking part in an alliance. Wagoner said at the time that the vote by GM's 12-member board to end the discussions was unanimous.

GM wanted payment to make up for the benefits the French and Japanese automakers would have received from the alliance, the companies said. Wagoner also said the partnership would have prevented his company from pursuing ties with other automakers.

The two sides had been at an impasse on potential savings from combining GM's $86 billion in annual purchasing costs with Renault and Nissan's $59 billion tab, two people familiar with the discussions said in early October.

GM shares, which peaked at $93.63 in April 2000, fell to a low of $18.61 on Dec. 28 last year as the stock declined 52 percent for 2005, the most of any company in the Dow Jones Industrial Average. The shares have risen 71 percent this year through yesterday and 19 percent since May 3, 2005, the day before Kerkorian first disclosed a stake in the automaker.

Former Chrysler Executive

York is a former Chrysler Corp. chief financial officer who advised Kerkorian on a failed attempt to take over that automaker in 1995. He helped Lou Gerstner cut $7 billion in costs to turn around International Business Machines Corp. in the mid-1990s.

He also helped lead financial turnarounds at Apple Computer Inc. and at Tyco International Ltd., which operates in dozens of industries and is the world's biggest maker of security systems.

In York's first day as a director, GM adopted much of an agenda he called for in a speech Jan. 10 to auto analysts in Detroit. Wagoner said GM would slash its $1.13 billion annual dividend in half and cut pay for top executives and directors.

York said GM needed those actions as part of an ``equality of sacrifice'' plan while demanding concessions from its unions.

Independent Director

He served as an independent director on GM's board, not as a representative of Kerkorian's Tracinda, that closely held company and the automaker said in filings in February. York will earn 4 percent of any profit Kerkorian has from his GM stake in 2009, according to earlier filings.

York is chief executive officer of Harwinton Capital Corp., an investment firm he founded in 2000. Harwinton is based outside Detroit in Rochester Hills, Michigan, where York lives. York remains a board member at Apple and Tyco.

He has an engineering degree from Massachusetts Institute of Technology in Cambridge and a master's degree in business from the University of Michigan in Ann Arbor. York held various jobs at GM, Ford Motor Co. and Chrysler from 1962 to 1993.

At Chrysler, York was Chairman and CEO Lee Iacocca's finance whiz in the early 1990s. He cut expenses by $3 billion, changed Chrysler's health-care system and developed cost-cutting initiatives with suppliers, York said in his January speech.

York is also a former director at MGM Mirage, owned by Tracinda, and was chairman and CEO of Norwalk, Connecticut-based Micro Warehouse Inc. from 2000 to 2003.

To contact the reporters on this story: Doron Levin in Southfield, Michigan, at [email protected] ; Jeff Green in Southfield, Michigan, at [email protected]

Last Updated: October 6, 2006 12:35 EDT