Tracinda still trying to force changes at Chrysler Kerkorian firm seeks 3 more directors, change in poison pill provision

October 26, 1995|By BLOOMBERG BUSINESS NEWS

NEW YORK -- Tracinda Corp. continued yesterday to push for changes at Chrysler Corp., asking the automaker to add three directors to the board, raise the threshold for activating its poison pill plan and create a committee of outside directors to study the company's cash position.

Chrysler called the proposals "predictable" and indicated it wasn't interested because they "relate to control issues."

In a "Dear Bob" letter delivered to Chrysler Chairman Robert Eaton, Tracinda asked Chrysler to add Jerome York to the board of directors, along with two others acceptable to both companies.

Tracinda, controlled by Las Vegas billionaire Kirk Kerkorian, is Chrysler's largest shareholder, with a 14 percent stake. Tracinda recently hired Mr. York, a former Chrysler executive, as vice chair

man to further its efforts to bring change to the automaker.

"Given the magnitude of our position and our long-term focus, we will continue to actively manage our investment," the letter, signed by Mr. York, said.

Tracinda also asked that shareholders be required to approve any issuance of so-called blank check preferred stock or other blocks of voting stock to holders. Blank check preferred gives voting rights to approved parties in case of a hostile takeover effort.

Mr. York said in the letter Tracinda and Mr. Kerkorian "currently have no intention to acquire Chrysler."

The letter was delivered on the day Mr. York was to meet with Chrysler officials in New York and was included in a Schedule 13D filing by Tracinda with the Securities and Exchange Commission.

Chrysler said it would review the proposals, but called them "predictable in light of the public criticisms recently leveled against the company by Kerkorian."

The nation's third-largest automaker said several of the proposals "relate to control issues" rather than efforts to enhance shareholder value.

The letter also asked that Chrysler appoint a committee of outside directors to review the appropriate size of Chrysler's cash cushion. Tracinda wants Chrysler to return some of its cash to shareholders.

Mr. York and Mr. Kerkorian say that Chrysler has too much cash on hand -- $6.4 billion to $7.5 billion, depending on whose figures are used. Chrysler said it needs the money to survive industry downturns and to take advantage of investment opportunities.

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