Kerkorian sells Ford at loss, could dump stake

By Soyoung Kim and David Bailey

DETROIT (Reuters) - Billionaire Kirk Kerkorian sold shares worth about $18 million in Ford Motor Co at a big loss and could sell his remaining 6 percent stake after becoming the automaker's largest outside investor this year.

Tracinda Corp, his investment company, said on Tuesday it had sold the shares was working with an investment bank on the potential sale of all 133.5 million shares it still holds.

Tracinda's investment in Ford had been seen as a vote of confidence in the No. 2 U.S. automaker and its turnaround strategy, and Ford shares tumbled 7 percent on the news.

Ford said it remained committed to its restructuring plan under Chief Executive Alan Mulally, who has pushed the company toward a unified operating structure and rushed to roll out new fuel-efficient small cars.

"We remain confident in and focused on our plan to transform Ford into a lean global enterprise delivering profitable growth for all," Ford said in a statement.

Analysts noted that the market for vehicles in the United States and Europe had deteriorated sharply since April when Tracinda began to build a position in Ford.

"Who needs the aggravation of trying to turn around a distressed company in a troubled industry in the middle of an economic downturn?", Shelly Lombard, a bond analyst at Gimme Credit, said in a research note.

"Ford has lost a potential source of liquidity, someone who could write a check for a few billion if it needed the capital," Lombard said.

MONEY LOSING

Kerkorian's pullout from Ford would be a costly retreat for the activist investor, who has a mixed track record with his investments at all three Detroit-based automakers.

Kerkorian surprised analysts and investors earlier this year by spending more than $1 billion to take his stake in Ford for an average price per share near $7.10.

Tracinda began selling Ford shares on Monday at $2.43, according to its statement. That represented a loss of almost 66 percent from what the fund paid on average.

"In light of current economic and market conditions, (Tracinda) sees unique value in the gaming and hospitality and oil and gas industries, and has, therefore, decided to reallocate its resources to focus on those industries," the investment firm said in a statement.

Ford shares have dropped 60 percent since June when Kerkorian raised his stake to 6.5 percent and said he was willing to support the automaker's turnaround with an injection of additional capital.

Tracinda did not request a seat on Ford's board.