A spokesman for Charles H. Keating Jr., whose holding company is the largest shareholder of Gulf Broadcast Co., on Friday disputed Gulf's accusation in a lawsuit that Keating tried to bribe Gulf's chairman, extort a premium price for his shares and traded in those shares illegally.
Robert Kielty, senior vice president of Keating's holding company, American Continental Corp., charged that it was Gulf Chairman E. Grant Fitts who named a price at which he would be willing to step down, become a consultant and implicitly turn over the company to Keating.
At the core of the dispute is Dallas-based Gulf's plan to sell most of its assets--five television stations and seven radio stations--to Taft Broadcasting Co. for $755 million. Wall Street analysts believe that the price is fair, if not slightly high. Kielty said American Continental, which holds 25% of Gulf stock, intends to oppose the sale on the grounds that the price is too low.
"That's a crazy, frivolous lawsuit," Kielty said. "What they're afraid of is that we might frustrate the sale."
The sale must be approved by a simple majority of shareholders at a vote that has not been scheduled.
American Continental also has filed a suit to enjoin the sale of 22 million shares of Gulf preferred stock to Taft, a maneuver designed to give Taft one-third of the shareholder votes. That would dilute American Continental's holdings to about 15% and would presumably ensure approval of the sale.
Keating, a former top aide to financier Carl Lindner, is chairman of Phoenix-based American Continental. His son, Charles H. Keating III, is chairman of Lincoln Savings & Loan Assn. of Irvine, a subsidiary of American Continental.
In its suit, filed in Nevada state court in Reno, Gulf charged that the Keating interests obtained their Gulf stock on the basis of inside information that Gulf was planning to liquidate.
Gulf also contended that, at a meeting late last year, Keating offered Fitts a premium for Fitts' Gulf stock and millions of dollars in payments if Fitts would step down and relinquish control of the company. Keating, it was also charged, tried to "greenmail" Gulf by asking to be paid a premium for his own stock.
Kielty denied the charges.