By John D. Stoll And Angela Chen
DETROIT--A former member of the Obama administration's auto
bailout team is representing four hedge funds that are pressuring
General Motors Co. for a board seat and a commitment to make $8
billion of share repurchases within a year.
Harry J. Wilson, a former hedge-fund partner who played an
extensive role in GM's 2009 bankruptcy and restructuring, visited
GM Chief Executive Mary Barra on Feb. 3 and expressed a desire to
be on the board, but he didn't reveal his association with the
hedge funds until Feb. 9, according to a company news release. GM
said Mr. Wilson represents the Taconic Parties, Appaloosa Parties,
HG Vora Parties and the Hayman Parties--together owning 34.4
million shares, or about 2.1% of GM's stock.
Shares of GM rose 2.3% to $36.83 Tuesday morning following GM's
disclosure. Mr. Wilson, 43, would like his nomination to the
13-member board and share-repurchase proposal considered at the
2015 annual meeting. He couldn't immediately be reached for
comment.
GM named a new director last week. Linda Gooden, a former
Lockheed Martin Corp. executive, became the 13th member of a board
almost entirely composed of people who have retired from active
management.
While Mr. Wilson did the bulk of his work at GM when he was on
the auto task force in 2009, he has remained active in the auto
industry. He is a board member at Visteon Corp., an auto supplier
based outside of Detroit, and has recently played a lead advising
role in the bankruptcy proceedings at RadioShack Corp.
Mr. Wilson started out at Blackstone Group and Goldman Sachs,
before becoming a partner at Silver Point Capital in Greenwich,
Conn. He will receive some of the investor group's profits from GM,
according to GM's news release.
He made waves when he arrived in Detroit six years ago. In
addition to essentially taking over the management of GM's North
American operations, he was a strong advocate of considering
killing Chrysler, a U.S. auto maker that also was bailed out by the
U.S. government and eventually absorbed by Italy's Fiat SpA. Mr.
Wilson believed the U.S. auto industry needed extensive
consolidation to survive, and he was one of the architects to
downsizing GM's brand portfolio, product line and dealership
base.
GM management has routinely referenced the company's "fortress"
balance sheet, which has $37 billion in available liquidity,
including $25 billion in cash. The company last week said it would
boost its dividend by 20% to 36 cents a share in the second
quarter, and consider additional actions to benefit shareholders
later in the year.
Ms. Barra, an engineer who took GM's helm a year ago, has set
aggressive margin goals for the company and aims to return the
company's ailing European division back to profitability by 2016.
Her first year as CEO was scarred by tens of millions of vehicle
recalls and several trips to testify before congressional
committees on safety lapses at the company.
While flush with cash, the auto giant, however, faces many
demands on its resources, including reserving potentially billions
related to a Justice Department investigation into the company's
ignition-switch recall from 2014. GM is increasing its capital
spending in 2015 in an effort to meet strict global emissions
standards and remake its struggling Cadillac luxury division.
In a statement, GM said it has had regular contact with the
investors in Mr. Wilson's group and will evaluate him as a nominee,
making a recommendation based on shareholder interests.
Mr. Wilson's work on behalf of four hedge funds is reminiscent
of the late Jerry York's attempts to steer GM's board on behalf of
billionaire investor Kirk Kerkorian a decade ago. Mr. Kerkorian
bought a large stake in GM while the company was run by ex-CEO Rick
Wagoner, and he won a board seat for Mr. York, a former auto
executive and one-time Apple Inc. board member.
Mr. Kerkorian eventually sold out of GM, frustrated by a lack of
action by the management team. The call from some hedge funds for
more buybacks has been heard over the past year, ever since the
government exited its bailout stake in the company.
Kyle Bass of Hayman Capital Management LP, one of the firms GM
said was backing Mr. Wilson, said in a presentation in December
2013 that he expected the company to return more capital to
shareholders through dividends and share buybacks. He has
repeatedly called for such moves since then. In January, Mr. Bass
told CNBC that GM has "too much capital on its balance sheet" and
urged the company to share more of its profits with shareholders,
including doubling its dividend.
While some of the firms working with Mr. Wilson aren't always
considered activist investors, which buy stakes and push for
financial or strategic changes, Mr. Wilson is familiar with
activist hedge funds in other cases. He was successfully nominated
by Daniel Loeb's Third Point LLC to the boards of Yahoo Inc. and
auction house Sotheby's.
Mr. Wilson's self-nomination to GM's board could accelerate the
auto maker's plan to return cash to shareholders, said Joseph Spak,
auto analyst at RBC Capital. Mr. Wilson's proposal to repurchase $8
billion of stock in a year would put GM at the low end of its $20
billion to $25 billion liquidity target, the analyst said.
David Benoit, Christina Rogers and Mike Spector contributed to
this article
Write to John D. Stoll at john.stoll@wsj.com and Angela Chen at
angela.chen@dowjones.com
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