Storer Weighs 3 Plans to Avoid Liquidation : Considers Stock Tender, ‘White Knight,’ Buy-Out
Storer Communications, fighting off a shareholder group that wants to liquidate the company, is considering three courses of action ranging from a tender offer for about one-third of its outstanding shares to acceptance of either a “white knight” or a leveraged buy-out proposal, sources in the financial community said Thursday.
Management of the company appears to favor a tender offer for about one-third of Storer’s outstanding shares and might recommend that course of action to the Storer board at a meeting scheduled for Saturday, sources said.
But at least two other proposals are in the works.
Tele-Communications, a Denver-based cable-TV company, is seeking financing for a friendly takeover bid in partnership with Knight-Ridder Newspapers and E. W. Scripps, sources said. Tele-Communications is expected to make its proposal to Storer before the board meeting Saturday.
A second proposal is being readied by Kohlberg, Kravis, Roberts & Co., a New York investment banking firm that specializes in leveraged buy-outs, and will also be presented to Storer before the meeting, one source said.
Kohlberg, Kravis, Roberts led a group of investors two years ago in the acquisition of another Miami communications firm, Wometco Enterprises, in a $1-billion buy-out that ranks as one of the largest such transactions in history. The Federal Communications Commission approved that deal less than seven months after Wometco agreed to be acquired.
Under Siege
In a brief telephone interview, Storer Chairman and Chief Executive Peter Storer declined to comment on any of the three scenarios. However, the 56-year-old chairman confirmed the scheduling of the board meeting and said a previously disclosed plan to increase the company’s bank credit has not been finalized.
The Storer chairman declined to specify the amount, but sources said the company is seeking to add more than $200 million to its existing bank credit line of $450 million. As of March 31, the firm had used $435 million of its available credit.
Storer has been under siege since March 19, when Coniston Partners, a New Jersey-based investment firm, announced that it would propose its own slate of board candidates at a Storer shareholders meeting on May 7, which would be committed to a liquidation of the company at prices in the range of $90 to $100 per share. At that price, Storer’s 16.4 million shares outstanding would be valued at as much as $1.6 billion.
Sources in the financial community said Thursday that Storer’s board and shareholders might accept an offer in the range of $80 to $82 per share, in view of the uncertainties accompanying any liquidation.
The price of Storer shares closed up $2.375 on Thursday at $74.125, near the 52-week high of $75.50.
If the company decides to make a tender offer for a portion of its own shares, the offer could be completed in 15 business days, according to Securities and Exchange Commission rules, instead of the usual 20 days required for a tender offer made by a third party. Shareholders will have only 10 days, however, to tender their shares if they want to be considered for pro-rated treatment in the event the offer is oversubscribed.
