Kerkorian sells part of his stake in Ford

By BILL VLASIC
Published: October 21, 2008 from http://www.nytimes.com/

DETROIT — The billionaire investor, Kirk Kerkorian, has sold part of his stake in the Ford Motor Company and may divest his remaining shares in another sign of slumping investor confidence in the ailing American auto industry.
The Tracinda Corporation, Mr. Kerkorian’s investment company, said Tuesday that it sold 7.3 million shares of Ford on Monday at a huge loss and intended to further reduce its remaining 6.09 percent stake.
The move underscored the weakening state of Ford and its two Detroit rivals, General Motors and Chrysler, which are in merger talks.
In a statement, Tracinda said that “current economic and market conditions” and other investment opportunities — in gambling and energy — led to its decision on Ford.
“Tracinda also stated that it intends to further reduce its holdings in Ford common stock,” the company said. “Including the possible sale of all of its remaining 133.5 million shares, depending on market conditions and available sales prices.”
The move was unexpected given Mr. Kerkorian’s previously stated support of Ford management and the automaker’s turnaround plan.
But Ford stock has fallen sharply in recent weeks amid concern about a dismal outlook for United States vehicle sales and the ability of Detroit’s automakers to avoid bankruptcy filings.
Mr. Kerkorian began buying Ford stock in April, and had spent about $1 billion to accumulate a 6.49 percent stake in the automaker.
Ford’s shares traded at $2.33 on Tuesday, but had recently fallen to as low as $1.88 a share.
Tracinda said it sold 7.3 million shares on Monday for about $17.7 million or an average of $2.43 a share. Its remaining holdings are worth about $311 million. Ford shares were down 3 percent, to $2.25 Tuesday morning.
A Ford spokesman Mark Truby said Tuesday, “We’re not going to comment on their investment decision, and are staying focused on our turnaround plan.”
Ford lost $8.7 billion in the second quarter and has struggled to sell cars and trucks in what is the worst auto market in the United States in 15 years.
Mr. Kerkorian’s investment in Ford had been seen as a vote of confidence in the troubled automaker.
The 91-year-old financier had previously amassed large stakes in G.M. and Chrysler, but sold his holdings after conflicts with management.
However, Mr. Kerkorian and his top deputy, Jerome York, appeared to be solidly behind the turnaround strategy set by Ford’s chief executive, Alan R. Mulally.
Mr. Kerkorian increased his stake in Ford after a June meeting in Las Vegas with Mr. Mulally and Bill Ford Jr., the company’s executive chairman and leader of the automaker’s founding family.
Shares in automakers have slid sharply this month because of the weak economy, depressed auto sales and the impact of tightening credit practices on prospective new-car buyers.
In a federal filing, Tracinda said market conditions and the attractiveness of other investments led to its decision to begin selling its Ford holdings.
“In light of current economic and market conditions, it sees unique value in the gaming and hospitality and oil and gas industries and has, therefore, decided to reallocate its resources and to focus on those industries,” the company said.
The move is another indication of the low level of confidence that investors have in the Detroit automakers.
Merger talks between G.M. and Chrysler have been slowed recently because of skepticism by potential investors in the companies.