Newspaper article St Louis Post-Dispatch (MO)

Chrysler Raises Dividend 25% Denies Move Inspired by Kerkorian's Raid

Newspaper article St Louis Post-Dispatch (MO)

Chrysler Raises Dividend 25% Denies Move Inspired by Kerkorian's Raid

Article excerpt

Chrysler Corp. raised its dividend by 25 percent Thursday, but the company's top executive said the move has nothing to do with an unfriendly takeover effort by corporate raider Kirk Kerkorian.

"The things we have done are not in response to Mr. Kerkorian," said Chrysler chairman Robert Eaton, shortly after the company announced that it was raising its annual dividend from $1.60 to $2.

Kerkorian, Chrysler's largest stockholder, had been pressing for the dividend to be raised to $5. He apparently was not satisfied by the increase.

A spokesman for Kerkorian said the dividend increase "is a very small step in the right direction, but it does not even begin to address the fundamental issue of substantially increasing value for all Chrysler shareholders."

Eaton, speaking at the company's annual meeting at the Regal Riverfront Hotel here, said Kerkorian's attempt to buy Chrysler had caused problems.

"Clearly Mr. Kerkorian has been a very disruptive force in the company recently," Eaton said. "I think we would be better off without the disruptions he has caused."

On April 12, Kerkorian and former Chrysler chairman Lee Iacocca stunned Wall Street by offering to buy Chrysler for nearly $23 billion. Their plan involved using much of Chrysler's $7.5 billion cash hoard to buy back stock. Kerkorian also wanted Chrysler to borrow heavily to help pay for the buyout.

Chrysler fought the move, and Kerkorian eventually acknowledged that he had not lined up financing for the deal.

Eaton said Chrysler is holding on to its cash and won't be going heavily into debt.

"Chrysler almost died during the last two recessions," he said. "That memory is vivid in our company. Chrysler has gone through too much and accomplished too much to gamble everything now." He said the money is needed to float Chrysler through the next downturn in auto sales.

Eaton dismissed Kerkorian's bid as an empty threat. …

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