Oct. 17 (Bloomberg) -- Billionaire investor Kirk Kerkorian's bet on Ford Motor Co. has put his controlling interest in MGM Mirage at risk.

The $1 billion he invested in Ford stock has dwindled in value by two-thirds since June. Yesterday, he pledged another 50 million MGM shares to back the $600 million Bank of America Corp. credit line he used to buy into the second-largest U.S. automaker.

That means the 91-year-old investor is offering his controlling stake in the world's second-largest casino company as a guarantee against the falling value of Ford just as the credit freeze threatens to send U.S. auto sales to their lowest levels since 1991.

``He has upped the importance of his Ford stake,'' said Bernie McGinn, president of McGinn Investment Management in Alexandria, Virginia, which owns about 325,000 Ford shares. ``He has more of his other assets involved.''

With the new MGM stock pledge, Kerkorian has put up 100 million shares, or 36 percent of Las Vegas-based MGM, as collateral. Kerkorian's total stake is 53.9 percent.

MGM has tumbled 70 percent in U.S. trading since April, when Kerkorian began buying what became 6.43 percent of Ford. Since disclosing his initial investment on April 28, the value of Kerkorian's Ford holdings has plunged about $658 million, to $342.1 million today; his MGM stake slumped about $5.5 billion over the same period.

Tracinda's Response

Winnie Lerner, a spokeswoman for the investor's Tracinda Corp. holding company, said there was no margin call on the Bank of America loan. Mark Truby, a spokesman for Dearborn, Michigan- based Ford, declined to comment about Tracinda's filing. Bank of America spokeswoman Louise Hennessy also declined to comment.

MGM rose 60 cents, or 4.2 percent, to $15 at 4 p.m. in New York Stock Exchange composite trading, and is down 84 percent over 12 months. Ford gained 16 cents to $2.43 and has given up 72 percent of its value in the past year.

Ford has lost $23.9 billion since the end of 2005. On May 22, the company said it had abandoned a goal of returning to profit next year, citing rising costs for steel and gasoline.

Kerkorian associate Jerome York has praised Chief Executive Officer Alan Mulally and his strategy for ending losses by cutting jobs, closing plants and adding more car models to make Ford less reliant on large pickups and sport-utility vehicles.

`Off-the-Cuff'

After York said in a May 1 Automotive News interview that Ford should shed its Volvo and Mercury brands, he contacted Ford Chief Financial Officer Don Leclair ``to apologize for off-the- cuff remarks,'' according to a May 9 Tracinda filing. Leclair is retiring Nov. 1.

The pledging of additional MGM shares ``indicates Tracinda's desire to hold on to its Ford investment in the face of a potential margin call,'' said analyst Brian Johnson at Barclays Capital in Chicago, who rates Ford as ``equal weight/neutral.''

``I would be concerned if he got out,'' investor McGinn said. ``I'm hoping to see Kerkorian not flush his Ford position. It's a continued vote of confidence.''

Kerkorian, ranked 27th on Forbes magazine's list of the richest people in the U.S., with a net worth of $11.2 billion, has made several forays into the auto industry.

In 1995, he led a hostile takeover bid for the former Chrysler Corp. and won a board seat in exchange for calling off his attack. Later, he unsuccessfully sued the new DaimlerChrysler, accusing it of misleading investors about Daimler-Benz AG's 1998 purchase of the U.S. automaker.

Profit on Chrysler

DaimlerChrysler lawyers estimated in 2003 that Kerkorian eventually made $2.7 billion on his Chrysler investment.

After taking what he initially said was a passive position in General Motors Corp. in 2005, Kerkorian gained a board seat for York and tried to force the world's largest automaker to merge with Renault SA and Nissan Motor Corp. Rebuffed, Kerkorian dumped his investment with an estimated $106 million profit in 2006.

Last year, he was among unsuccessful bidders to buy Chrysler from Daimler AG.

Kerkorian, the son of an Armenian immigrant rancher in California's San Joaquin Valley, started his first business by brokering the sale of surplus military aircraft after World War II.

After speculating in airlines for much of the 1960s, Kerkorian moved to the gambling industry in 1967, buying his first casino and building the 1,500-room International Hotel, then Las Vegas's largest. He founded the MGM Grand Inc. casino company in the 1980s and acquired Mirage Resorts Inc. in 2000 for $6.4 billion.

`Very Smart Guy'

``He's been through various cycles in his career,'' said Matt Sodl, an investment banker with Los Angeles-based Innovation Capital LLC. ``He's a very smart guy. If you had an investment fund that approximated his investments, you would have done all right.''

The current financial crisis, the worst since the Great Depression, has ensnared other billionaires.

Lenders to Sumner Redstone's National Amusements Inc. forced him to sell 17 million CBS Corp. shares on Oct. 10 for $7.10 each, at a discount to the record low the stock set on that day. Chesapeake Energy Corp. said CEO Aubrey McClendon sold ``substantially'' all of his common shares to meet margin loan calls that same day.

Ford Chairman William Clay Ford Jr. sold 1 million common shares for $5.05 million in September at a loss to retire debt incurred in exercising options.

Kerkorian, who was 12 when the U.S. stock market crashed in 1929, isn't the type of investor to flinch amid adversity, said David Healy, an analyst with New York-based Burnham Securities Inc..

``If he had to sell out some of his Ford stock, he'd lose face,'' said Healy, who follows the industry from Sierra Vista, Arizona. ``It would damage his reputation as a speculator. He's well over 90 years old and he's a billionaire. He doesn't need the money.''

To contact the reporter on this story: Bill Koenig in Southfield, Michigan, at wkoenig@bloomberg.net; Doron Levin in Southfield, Michigan, at dlevin5@bloomberg.net

Last Updated: October 17, 2008 16:32 EDT