Kerkorian Envisions true Partnership With Uaw

By: Lauren Woods

Kirk Kerkorian, the American billionaire and CEO of Tracinda Corporation, envisions a "true partnership" with the United Auto Workers (UAW). The aim of the billionaire is to foster equal sharing in the "risks and rewards" of his $4.5 billion bid to buy the Chrysler Group. In a statement made Friday, Kerkorian said his plans are nothing short of a "transformation" of Chrysler that aligns the interests of all employees, executives and investors.

The statement of the "father of the megaresort" surfaced the news Friday. He also said that other Chrysler bidders also may seek union support by offering workers part ownership in the automaker. But Kerkorian is the first bidder to go public with a purchase price and strategy to partner with organized labor.

"We believe the only realistic plan for Chrysler is one in which all parties share equitably - with no one group (including ourselves) trying to gain an unfair advantage over the others," said Tracinda Corp., Kerkorian's investment firm.

The release of Kerkorian's announcement Thursday came to the industry like a bomb. He said that he had joined three other bidders in the competition to purchase the American division of DaimlerChrysler AG. Kerkorian, who, since 1995, tried to take over Chrysler with the hopes to distinguish his bid from others with his open-ended offer to include management and the UAW in the ownership of the ailing automaker. "What we are talking about is a transformation in the way risks and rewards in a large enterprise are shared," Tracinda said.

Los Angeles-based Tracinda did not give further on how a Kerkorian-owned Chrysler would be structured. The Kerkorian offer brings to four the number of bidders in contention for Chrysler. DaimlerChrysler said last 14 February that all options were on the table to turn around the struggling American luxury arm, including a sale. Other known bidders of Chrysler include the Cerberus Capital Management, the Blackstone Group and Centerbridge Partners, and the Magna International Inc.

Tracinda's statement was vague about how a "true partnership" would work with executives and the UAW. However, the private firm said that any arrangement with management and labor must be consensual. "We acknowledge that an approach cannot be forced on any of the parties, but rather can only be achieved with all parties feeling as if they are the recipients of a fair deal," Tracinda said.

In a radio interview Friday, UAW President Ron Gettelfinger said he has yet to speak with Kerkorian, York or any other Tracinda official about the bid. "I've had no discussions with anyone from Tracinda, and I don't recall that anyone in our organization has," Gettelfinger said on the Paul W. Smith Show on WJR station. He added that other bidders had already approached the union and made it offers of equity stakes in Chrysler. "We've heard that from other interested parties that we have had conversations with," he said.

Gettelfinger declined to characterize whether the union supports or opposes the idea of union workers owning stock in the former No. 3 U.S. automaker. However, he has previously criticized private-equity firms, in particular, for "stripping and flipping" the assets of troubled companies. Kerkorian's offer could include rewarding blue-collar employees with stock for the company's performance and giving board representation to union leaders, according to people familiar with the possibilities.

Gettelfinger, in his remarks, acknowledged that DaimlerChrysler is likely to divest Chrysler. "Initially, our position was that we would prefer that the Chrysler Group stay as part of Daimler-Benz," he said. "Obviously, after attending the shareholders meeting, and you can see what the impact on the stock was by the announcement on Feb. 14, it appears that something is definitely going to happen. I don't see this as a simple deal. This is major. It's going to take a lot of work and a lot of effort and a lot of internal analysis of exactly how to handle this."

The Chrysler sale transaction is expected to heat up next week. And deeper discussions about the bids are expected to take place. The heat is on and workers are hoping that could bring in coolness so as not to blur their future.

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