Steinberg Firm Buys 10.4% Stake in Wickes; Now Its Largest Holder
A company controlled by financier Saul P. Steinberg has bought a 10.4% stake in Wickes Cos., the Santa Monica-based diversified retailer that recently emerged from one of the largest bankruptcy proceedings in history.
Reliance Insurance Co., a subsidiary of Steinberg’s New York-based Reliance Group Inc., paid $37.9 million for 10 million of Wickes’ about 96 million shares outstanding, according to a document filed Friday with the Securities and Exchange Commission.
Reliance said it bought the Wickes stock for investment and, depending on the stock price and availability, may increase its holdings or sell the stock.
Reliance Insurance bought the 8.8 million shares between March 12 and March 21 at prices ranging from $3.625 to $3.9375 per share. In addition, Reliance bought nearly 1.2 million shares on a when-issued basis under Wickes’ reorganization plan.
In addition to the 10 million shares owned by Reliance Insurance, Reliance director David C. Woodward owns 1,000 Wickes shares and warrants to buy an additional 200 shares.
Bill Mallory, Wickes’ executive vice president of finance, said that the purchase came as a surprise and that Wickes executives have not been contacted by Steinberg and his associates. The purchases make Reliance the largest shareholder in Wickes, he said.
Mallory said he couldn’t comment on how the Wickes management would react to a takeover offer or a request for board representation.
“It’s extremely difficult to speculate on that,” he said. “Right now it’s business as usual.”
A spokesman for Reliance said the company routinely invests in a wide variety of stocks. Reliance bought the Wickes stock because “they think it’s a good investment.”
Wickes closed Friday in over-the-counter trading at $3.75 bid, up 37.5 cents. In the year before it filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code in April, 1982, Wickes had traded as high as $17 per share.
Under Chapter 11, a company is allowed to continue operating under existing management while it works out a plan to pay its creditors.
Wickes emerged from bankruptcy proceedings on Jan. 26 with a plan to settle about $1.6 billion in pre-Chapter 11 debts through a combination of cash payments and newly issued classes of debt and equity securities. The company has issued about 80 million new shares of stock on top of the more than 15 million that already existed.
Wickes--which lost a total of $507 million during the two-year period ended January, 1983--was pared down and returned to profitability by Chief Executive Sanford C. Sigoloff, a corporate rescue artist who now appears in commercials for Builders Emporium and Wickes Furniture, two Wickes Cos. subsidiaries.
Steinberg last year attempted to take over Walt Disney Productions. The bid was dropped after Disney agreed to pay $325 million in exchange for Steinberg’s Disney stock and a promise by Steinberg not to invest in the Burbank-based company for the next decade.
WICKES COS. AT A GLANCE
Fiscal years Wickes Cos. is a diversified retailer whose major businesses include the Wickes chain of furniture stores, the Builders Emporium home improvement centers, the Wickes Lumber chain of building materials stores and the Howard Bros. Discount Stores in the South. In late January, Wickes’ reorganization plan went into effect, and the company emerged from court-monitored bankruptcy proceedings under Chapter 11 of the U. S. Bankruptcy Code. l985 Revenues: $3.03 billion Income (loss) from continuing operations: $9.7 million Net Income (loss): $296.5 million 1984 Revenues: $2.88 billion Income (loss) from continuing operations: $9.5 million Net income (loss): $24.8 million 1983 Revenues: $2.64 billion Income (loss) from continuing operations: ($143.4 million) Net income (loss): ($248.7 million) 1982 Revenues: $3.5 billion Income (loss) from continuing operations: ($189.9 million) Net income (loss): ($258.3 million)
