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Kerkorian wants to meet with Chrysler workers
2007-04-21
Representatives of billionaire investor Kirk Kerkorian are seeking a meeting with a group of Chrysler workers who are proposing an employee-led buyout of the automaker to consider some form of a cooperation, a person familiar with the effort said on Friday. A group of Chrysler workers in Toledo, Ohio, has formed an "employee buyout committee" and sent a formal proposal to DaimlerChrysler AG (DCXGn.DE) offering to take a 70-percent stake in the automaker over a period of five years or more on behalf of its roughly 50,000 U.S. factory workers. The offer comes in the wake of a $4.5-billion offer for Chrysler from Kerkorian's investment company, Tracinda Corp. The Tracinda offer includes a provision for a "substantial" share of equity in the automaker to be handed over to its major union, the United Auto Workers. A person familiar with Tracinda's proposal said the investment company saw areas of common interest between its offer and the proposed employee buyout. As a result, Tracinda is seeking a meeting with the employee group to see if there are potential areas of cooperation, the person said. Chrysler Group spokesman Mike Aberlich said the proposal from the employee group had been received by Chrysler Chief Executive Tom LaSorda. "It's been forwarded to the people that are looking at the options," he said. Michele Mauder, who works at Chrysler's Toledo plant that makes its popular Jeep Wrangler, said the employee buyout group she represents had asked DaimlerChrysler for an "emergency grace period" of 45 days to consider its offer. "We would like an answer on that," she said, adding that DaimlerChrysler's supervisory board could take up that issue as soon as a meeting set for next week in Germany. "We deserve a shot before anyone else -- before any private equity firm or anybody else that has a bid on the table," she said. Mauder said she was open to a meeting with Tracinda, although her group has said it supports the bid of Canadian auto parts maker Magna International Inc. (Toronto:MGA.TO) over competing private equity firms. "We need to keep all doors open at this point," she said. For his part, UAW President Ron Gettelfinger told a Detroit radio station on Friday the union was reviewing the employee buyout proposal but that his priority was to persuade Chrysler's German parent Daimler to keep the automaker. UNION WAR ROOM "We've had a war room established where we're focused on all the different alternatives at Chrysler," Gettelfinger told radio station WJR. Gettelfinger declined to rule out the possibility that the UAW could take an equity stake in Chrysler. But Canadian Auto Workers President Buzz Hargrove said he was not interested in an employee stock ownership plan. "The workers already have everything invested in that company today including their jobs and their pensions," Hargrove told trade publication Automotive News. Analysts expect Chrysler's unions, led by the UAW, to be central to any final deliberations needed to clinch a deal for the sale of Chrysler by its German parent, DaimlerChrysler (NYSE:DCX)(DCXGn.DE). In one sign of the UAW's influence in the auto sector, private equity firm Cerberus Capital Management indicated this week that it would withdraw from a $3.4 billion investment to support Delphi Corp.'s (Other OTC:DPHIQ) emergence from bankruptcy after failing to close a deal on labor costs with the union. Daimler strategy chief Ruediger Grube has been in New York for talks with a number of bidders for Chrysler. One person familiar with the situation has said preliminary talks could be completed as soon as May. Bidders for Chrysler include private-equity firms Cerberus Capital Management (CBS.UL) and Blackstone Group as well as Magna, according to people familiar with the bids. Kerkorian's $4.5-billion bid is the only offer that has been made public, although it has been considered too low to be competitive by many analysts. DaimlerChrysler Chief Executive Dieter Zetsche said in February all options were open for Chrysler, which lost nearly $1.5 billion in 2006 as buyers shifted away from the light trucks and sport utility vehicles that generated two-thirds of its total sales. Chrysler plans to cut 13,000 jobs as it seeks to return to profitability by 2008.
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