Storer Attacks Dissidents’ Plan as Unrealistic : Says Liquidation Would Bring $60 a Share, Not $90
Storer Communications Inc., under siege by a group of shareholders who want to liquidate the company, attacked the proposal Monday as flawed and unrealistic, and it vowed that current management can double the market value of Storer’s stock within four years if left to its own devices.
Nevertheless, Storer is considering merger partners and the possibility of recapitalizing the company or taking it private, Storer Chairman and Chief Executive Peter Storer told reporters and financial analysts in two separate meetings here Monday, although he added that no firm proposals are “on the table.”
Shareholders to Meet May 7
The meetings signaled a stepped-up campaign by the Miami-based company to keep its broadcasting and cable-television business intact. Storer’s management will get its answer at a May 7 meeting, when shareholders will elect a board of directors from either a management-backed slate or one proposed by a dissident shareholder group formed last month by Coniston Partners, an investment firm that controls about 5.5% of Storer’s outstanding shares.
Coniston Partners has told Storer shareholders that they should reap $90 to $100 per share if the liquidation plan is adopted. The New Jersey-based investment firm also maintains that the program could be substantially completed by early 1986, thereby exempting the corporation from certain undesirable tax consequences.
Those tenets of the Coniston plan were challenged Monday by Peter Storer, 56, a son of the company’s founder who has served as chief executive since 1979. He contended that a liquidation of Storer “would almost certainly take more than a year,” forcing the company to pay capital gains taxes. The chief executive also suggested that liquidation could cost the company “the potential of depreciation and (investment tax credit) recapturing in a very large amount,” ultimately reducing the liquidation proceeds to just $60 per share instead of the $90 per share envisioned by Coniston Partners.
Storer also argued that a one-year liquidation would force the sale of assets at “fire sale” prices, noting that it has taken almost two years to sell 11 cable-TV stations that have proved too costly or ill-suited for Storer’s long-term plans.
Although the company received just $36 million last year from the sale of cable systems, Storer said he expects the company to receive a total of $180 million in cash and notes when these sales are concluded later this year.
Storer earmarked some of its costlier or troublesome systems for sale in 1983, when it had to come to grips with its mounting debts. As of March 31, Storer owed about $435 million to banks.
Including bank loans, the company’s total long-term debt totaled $785 million at the end of 1984, compared to about $729 million at the end of the previous year.
Storer officials said they expect to pay off most of that debt in the next three to four years from the cash generated by cable systems now nearing completion.
