Kirk Kerkorian is showing his first hand in his gamble with General Motors – selling it in pieces, starting first with the Hummer.
The billionaire investor also wants to unload GM’s Saab vehicles, sell its financing operations, slash salaries and wages, and halve a $2-per-share dividend to conserve cash during a drastic makeover.
GM has just 1,000 days left before its $30 billion cash pool runs dry, says Kerkorian’s point man on his GM investment, veteran numbers cruncher Jerry York. York helped Kerkorian a decade ago with his Chrysler takeover play, which earned Kerkorian more than $3 billion.
The restructuring plan outlined by York includes raising $11 billion from selling half of the auto-financing arm, GMAC. If a buyer isn’t found, GM could sell its insurance and mortgage operations for a similar amount, he said.
Warning that GM is heading “into a crisis mode,” York said it “needs every penny of cash it can husband for a vitally important restructuring.”
One quick savings: slash the $2 dividend – which costs GM $1.1 billion a year – to $1.
York said Kerkorian would also “share the sacrifice” since he’d lose big on his 44 million shares, which make him GM’s fourth-largest individual investor.
York said Kerkorian has been planning a secret makeover plan since March that would cut costs and make the world’s largest automaker a smaller company.
As much as $4 billion could be made by selling Hummer, Saab and its joint venture in Isuzu, all of which York called “distractions.”
GM lost more than $4 billion in North America during the first nine months of 2005, a corporate record. It expects to report its fifth-straight losing quarter later this month.
GM’s own numbers cruncher, Chief Financial Officer Fritz Henderson, applauded York’s public remarks at Detroit’s auto trade show.
“This is one of our largest shareholders who is articulating his vision for what we need to do, and frankly there is a lot that he had to say that I agree with,” Henderson said.
GM’s stock is down more than 50 percent for the past year, but it is up 14 per cent in 2006. It slipped to $21.98, down 43 cents, in after-hours trading yesterday on the New York Stock Exchange.
paul.tharp@nypost.com
Saab story
GM investor Kirk Kerkorian’s top aide says drastic actions are needed to revive the world’s largest automaker. The proposed measures include:
* Cut in half the $1.1B annual dividend
* Slash exec salaries
* Unload Saab division
* Consider selling Hummer unit