GM Board to Meet As Alliance Deadline Approaches

DETROIT October 2, 2006; Sarah Karush wreiting for the AP reported that General Motors Corp.'s board should have plenty to talk about when it meets Tuesday.

An Oct. 15 deadline is fast approaching for evaluating a proposal to join the Renault-Nissan alliance -- an idea that has the backing of a major shareholder but has met with skepticism from management.

Meanwhile, the shareholder behind the idea, billionaire investor Kirk Kerkorian, has ratcheted up the pressure by announcing his intention to increase his stake and pushing for an independent evaluation of the alliance proposal.

But deadline pressure and one active shareholder won't necessarily force the board to take action. The study period for the alliance proposal could always be extended, as Chairman and Chief Executive Rick Wagoner last week suggested might happen.

GM spokesman Brian Akre said Tuesday's meeting is a regularly scheduled monthly event. He declined to comment on the agenda.

Kerkorian, whose private equity firm, Tracinda Corp., is represented on the board by Jerome York, said in a filing to the Securities and Exchange Commission on Thursday that he wants to buy up to 12 million more shares of GM. That would boost his current 9.9 percent stake to as much as 12 percent.

Kerkorian said at the end of June that France's Renault SA and Japan's Nissan Motor Co. were interested in the possibility of GM joining their alliance. GM's board agreed to start exploratory discussions, and Wagoner and Renault-Nissan CEO Carlos Ghosn later set an Oct. 15 deadline to weigh the potential benefits.

Wagoner and Ghosn met again Wednesday in Paris. Afterward, GM officials voiced skepticism about the proposed linkup, saying Renault-Nissan stands to benefit more than GM.

In its SEC filing Thursday, Tracinda urged the GM board to continue analyzing what the investment firm called "a strong opportunity" and to hire independent advisers to look at a potential three-way alliance.

Wagoner said Thursday that the Oct. 15 deadline could be extended. "Our primary focus has to be doing what's right for General Motors," he said.

Meanwhile, Kerkorian will need regulatory approval to increase his stake beyond 10 percent because of banking and insurance interests that GM owns.

In a letter to Wagoner included in Thursday's SEC filing, Tracinda asked him not to stand in its way as it moves through the regulatory process.

"We believe additional investment by Tracinda in GM would be viewed positively by investors, and your support will maximize the likelihood of obtaining regulatory approval," Tracinda said.

Peter Henning, a former SEC attorney who teaches at Wayne State University Law School, said GM could slow things down for Kerkorian if it doesn't want him to increase his stake.

"They don't have to commit themselves, and, in fact, they can be cooperatively uncooperative," he said.

By the same token, Kerkorian doesn't have to buy more shares even if he gets the approval, which would likely take months, Henning said.

"A lot of this is posturing," he said.