More Details of Kerkorian/Chrysler Deal Divulged

02/16/96

Reuters reported that more details of the Chrysler/Kerkorian peace treaty have been divulged. The agreement, which the billionaire and the automaker came to last week, provides an exit strategy for Kerkorian to sell off his stock in the corporation, if he wants.

Kerkorian is the automakers largest single shareholder, with a 13.75% share of the company. The agreement leaves Kerkorian's investment firm Tracinda Corp free to sell Kerkorian's stock in the company without Chrysler's permission, but only up to a 5% stake in the company.

In order to sell a more substantial portion of his Chrysler stock, Kerkorian must get Chrysler's approval, seek an underwritten offering, or sell to someone who agrees to the same terms that Kerkorian agreed to last week when he pledged a 5 year standstill on the acquisition of more Chrysler stock.

The agreement provides Chrysler some peace of mind, as it limits Kerkorian's ability to sell his stock to those who might be in a position to launch a Chrysler takeover.

For Kerkorian, the agreement provides that he can ask Chrysler to register shares to be sold in an underwritten public offering twice and expect the corporation to "use reasonable efforts" to carry out his request.

The agreement also allows Tracinda Corp. to nominate Kerkorian to Chrysler's board of directors as a replacement for James Alijian. Alijian, a long time Kerkorian associate and executive of Tracinda Corp., was appointed to the board as part of Chrysler's concessions to the billionaire.

Paul Dever -- The Auto Channel