Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, June 1, 1995 TAG: 9506010066
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Bloomberg Business News
DATELINE: DETROIT LENGTH: Medium
The bid fizzled after Kerkorian failed to find financing. But the 77-year-old investor left the door open for another bid by hiring the investment banking firm Wasserstein Perella & Co. as an adviser. Kerkorian also intends to keep his 10 percent stake in the automaker.
``Hiring Wasserstein Perella means we're not finished yet,'' said William Benedetto, chairman of Benedetto, Gartland & Greene Inc., a New York-based investment banking partnership. ``Wasserstein has the ability to shop the company as opposed to shopping a block of stock.''
The Las Vegas billionaire made his offer after complaining about the company's sagging stock price and its refusal to share more of its $7.2 billion in cash reserves with shareholders. Although Kerkorian released few details of how he would pay for his bid, he proposed using $5.5 billion, or about 75 percent of Chrysler's reserves, to help finance the transaction. He still needed to arrange as much as $13 billion in financing.
Chrysler's board, which said that company never was for sale, wants the automaker to keep at least $7.5 billion in cash reserves to weather the next economic downturn.
Since reaching $62.50 a share in January 1994, the No. 3 automaker's stock has declined more than 30 percent. During that time, the company reported net income of $4.3 billion.
The value of Kerkorian's 36 million shares in Chrysler has appreciated about $157 million since he made his offer in April - but that fell far short of what he wanted.
The stock's price soared 24 percent to $48.75 from $39.25 on April 12, the day Kerkorian made his $55-a-share bid. It then drifted steadily back down, reflecting investors' doubts that the transaction would go through. The stock closed Wednesday at $43.62 1/2, up $1.
by CNB