KERKORIAN SEEKS TO BOW OUT ON HIGH NOTE
By Bernard Simon in Toronto
FT
May 29 2007 03:00
Kirk Kerkorian is struggling to end his long investment career on a
high note.
Until last year, Mr Kerkorian, who turns 90 on June 6, was set to
be remembered as one of the builders of modern Las Vegas, and for
the handsome profits he reaped from a 14 per cent stake in Chrysler
after the Detroit-based carmaker fell into the arms of Germany’s
Daimler-Benz.
But two of Mr Kerkorian’s latest and boldest forays have not gone
smoothly.
An attempt to take the wheel of General Motors last year ended in
humiliation.
For a time, Tracinda- Mr Kerkorian’s holding company named after
his two daughters, Tracy and Linda – was GM’s biggest individual
shareholder. But Mr Kerkorian sold his shares last autumn after the
carmaker rejected his proposal for an alliance with the Renault-Nissan
group.
More recently, Mr Kerkorian struggled in his attempt to become a
Chrysler shareholder for a second time. DaimlerChrysler all but
ignored Tracinda’s $4.5bn offer, giving the nod instead to Cerberus
Capital Management, the private equity group.
The son of Armenian immigrants, Mr Kerkorian ferried aircraft across
the Atlantic during the second world war.
He used poker winnings to buy an aircraft in 1945,offering charter
flights between Los Angeles and Las Vegas. Airlines have been among
his favourite investments.
He sprang to prominence in the late 1960s by building Las Vegas’s
first mega-resort and, at the time, the world’s biggest hotel.
He also reaped handsome profits from twice buying and selling the
Metro-Goldwyn-Mayer film studio. His investment in Chrysler paid off
with a $3bn profit. But an attempt to take over Walt Disney in 1984
came to naught.
Mr Kerkorian still controls MGM Mirage, the second-biggest publicly
traded casino group.
He used the proceeds from the sale of his GM investment last year to
raise his stake to 62 per cent.
His future role at MGM has been thrown into question with last week’s
announcement that he was seeking "strategic alternatives" for his
stake, involving "financial restructuring transactions".
The news has sparked speculation that Mr Kerkorian is preparing to
sell his holding to a private equity group.
At the same time, Tracinda has offered to buy two of MGM’s prime
properties, suggesting that its ageing owner still has ambitions in
Las Vegas.
The extent of Mr Kerkorian’s own involvement in this and other recent
deals is hard for outsiders to gauge. He relied heavily in his quest
for GM and Chrysler on Jerry York, a former chief financial officer
at Chrysler.
Mr Kerkorian has given only two media interviews over the past decade
– one to the Los Angeles Times shortly after he began his move on GM
in mid-2005, the other to the Wall Street Journal last autumn when
he sold the last of his 9.9 per cent stake.
The Journal reported in December that Mr Kerkorian still drove
himself to his nondescript Beverly Hills office in a Jeep Cherokee
sports-utility vehicle.
He has yet to start using a credit card.
Degeneration in his left eye had forced him to give up tennis, but he
was hoping that stem-cell surgery would be available in a few years
to improve his vision.
"I’m going to play again," he vowed.