JAJ on Jerry York

I’m still tracking the responses to Jerry York’s speech the other day.  Forbes magazine has a brief piece quoting Dagens Industri, who interviewed Jan-Ake Jonsson, CEO of Saab Automobile AB.  Jan-Ake is quoted as saying it would be "wholly wrong" for GM to consider the sale of Saab at this point.

But in an interview with DI, Jonsson said GM has continued to invest in product development at Saab, while Saab itself has slashed costs since 2002 and can be expected to return to profit this year. In such circumstances, Jonsson said it would be a mistake for GM to cut and run now.

You might be wondering why this is of such interest.  Well, Kirk Kerkorian’s Tracinda Corporation doesn’t havea seat on GM’s board yet, but as one of the largest single shareholders, it could force a proxy battle and not only get it’s own seat on the board, but with the support of a few other large shareholders, Tracinda could load a few like-minded people onto the board.  ‘Like-minded’ in this instance means "sell Saab".

If any of you brilliant Scandinavians can find the Dagens article online and provide a brief translation then I’ll babysit your kids. 

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  1. Swade, Jerry York and Kirk Kerkorian have until February 6 to file proxy proposals to be voted on at GM’s June shareholders’ meeting. Kekorian and York could file a shareholders’ resolution asking the board to explore the suggestions. Alternately, Kerkorian could nominate his own slate of board members on a proxy ballot. York has denied attempting to mobilize shareholders as a prelude to a proxy fight, but your readers would be wise not to dismiss the likelihood such a battle will occur. The overwhelming expectation on Wall Street is if the cuts don’t happen soon, Kerkorian will either start the proxy battle or begin an orderly retreat by selling his 44 million shares into a sagging market for GM stock — driving down a share price already near a 23-year low. But nervous SAAB fans shouldn’d see a Kerkorian sell-off as being to their interests. As Bloomberg News columnist Dorom Levin wrote January 12, either scenario “would create havoc for GM and raise the danger of collapse. Kerkorian wants to avert a Chapter 11 filing, which probably would wipe out his initial $1.7 billion investment.” Levin sees Kekorian and York using “kid-glove treatment” so far, but it “could get rough overnight if GM fails to respond.” He continues:

    “For starters, the automaker ought to consider cutting the dividend in early February, at the next opportunity, to save cash and to signal Kerkorian and York that it hears them.

    “Secondly, GM ought to copy IBM’s action of Jan. 5 and immediately freeze its U.S. pension funds for salaried workers. This would save cash right away and lay the groundwork for negotiations toward a freeze of pensions covering hourly workers. Defined-benefit plans are on the way out, so why not take the tough step now?

    “IBM is healthy, having learned from bitter experience the lessons of competing against younger, nimbler information technology companies. GM has to adopt a similar mindset and not put off what can be done today.

    “Some on Wall Street believe Kerkorian, 88, is over the hill and has lost his touch. York assures me that his boss is as acute, bright, and focused as ever and determined to see his investment through to a turnaround.

    “Until he sees the situation as hopeless, Kerkorian won’t let GM stumble into bankruptcy without lighting a fire under Wagoner and the GM directors. For their sake and for GM’s, it’s best to act as though that fire already is burning.”

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