GM says in talks with Tracinda about board seat

DETROIT, Dec 7, 2005; Jui Chakravorty writing for Reuters reported that- General Motors said on Wednesday it was in discussions with Las Vegas billionaire investor Kirk Kerkorian's Tracinda Corp. for a seat on its board of directors.

GM spokeswoman Toni Simonetti said the company had no further comment.

"If Kerkorian does get representation, GM will have an extremely vocal shareholder," T. Rowe Price analyst Brian Ropp said.

"Kerkorian will focus on what is best for GM's shareholders, which can conflict with GM bondholders, GMAC bondholders, and the UAW," Ropp said, referring to the United Auto Workers Union. "It will make things very interesting."

Kerkorian said in September he might seek a seat on GM's board, but has also said his investment was "passive." There has been widespread speculation that he would ask for a seat on the board.

The 88-year-old investor led a failed hostile bid for Chrysler Corp. a decade ago.

Tracinda has spent $1.7 billion since April to buy 56 million shares of GM stock, about 9.9 percent of the total stock available.

Tracinda declined to comment.

GM has lost nearly $4 billion this year, while its shares have plunged more than 45 percent.

Tracinda acquired a large chunk of GM's shares at $31 each, but the stock has traded well below that in recent weeks, and fell to its lowest levels in nearly two decades last month. nalysts have said the likely candidate for a seat on GM's board would be Jerome York, former chief financial officer at Chrysler Corp., now a unit of DaimlerChrysler AG.

York is a veteran of large-scale turnaround efforts at Chrysler and IBM, where as chief financial officer he led a rigorous cost-cutting effort.

GM's Chief Executive Rick Wagoner has been under mounting pressure as the world's largest automaker grapples with high labor and commodities costs, loss of U.S. market share to foreign rivals and slumping sales of large sport utility vehicles.

On Tuesday, the automaker's board approved a plan to replace GM's chief financial officer, John Devine, with Frederick "Fritz" Henderson, chairman of GM Europe. Devine would step down after his five-year contract expires this month, and Henderson would take over on Jan. 1, GM said.

Devine has agreed to remain beyond his contract for up to one year as vice chairman to help with the transition and advise the company on other strategic issues, GM said.