Kirk Kerkorian, the billionaire investor, is abandoning his $1bn bet on Ford, after being crushed by the car maker's collapsing share price.
Tracinda, Mr Kerkorian's investment vehicle, declared yesterday that it had dumped a first sliver of its share stake and was looking to sell more. If it manages to get the current price for its remaining shares, Tracinda will get just $314m (£186m) for a holding it amassed only a few months ago at a cost of $995m.
Slumping car sales have upended Ford's turnaround plan when once it had appeared on course to return to profitability next year. Now, even the massive lay-offs and production cuts of recent years do not appear sufficient, and investors have begun to fear that the car maker could face bankruptcy if matters do not improve. Its rivals General Motors and Chrysler are considering a merger because of the dire outlook.
According to Forbes magazine, 91-year-old Mr Kerkorian is the 27th richest man in the US, with a net worth of $11.2bn, but Tracinda took out a loan to buy its Ford stake. Bank of America has demanded increasing amounts of collateral in recent days, and Mr Kerkorian had to pledge more of his shares in MGM Mirage, a casinos company, to assuage his lender.
Tracinda said that, "in light of current economic and market conditions, it sees unique value in the gaming and hospitality and oil and gas industries and has, therefore, decided to reallocate its resources and to focus on those industries".
When Mr Kerkorian first announced he had taken a stake in Ford, he declared it was a long-term investment. He is the biggest single shareholder outside the Ford family.Reuse content