Judge Rules Votes Were Not Miscounted : Storer Seats 4 Dissidents on Board
Storer Communications, retaining control of the company, seated a newly elected board of directors Wednesday after failing to convince a federal judge that shareholders’ votes were miscalculated.
Storer claimed it should have received six, instead of five, seats on the nine-member board and obtained a temporary injunction last Friday from an Ohio state court. That blocked the votes from being certified by Storer’s own inspector of elections, C. T. Corp. of Wilmington, Del.
The remaining four seats went to nominees of a dissident group led by New York-based Coniston Partners, which owns 5.3% of Storer and wants to liquidate the company.
But Storer’s injunction was challenged by Coniston and overturned Wednesday morning by a federal judge in Cleveland.
“This is it,” said Storer spokesman Andy Holdgate, adding that the company wouldn’t take any further legal action.
Storer had claimed that C. T. “erroneously tabulated votes by the holders by more than 500,000 shares.”
Peter Storer, who was reelected chairman at the new board’s organizational meeting, refused to comment on the federal court decision that allowed four Coniston nominees board representation.
Keith R. Gollust, a general partner of Coniston who received a seat on the board, called the outcome a victory.
“Obviously, we’re gratified that we received such significant support from the shareholders,” he said. “We feel that they have expressed a pretty strong preference in the programs we have stood for from the beginning--to obtain full value for the company.
“I think too often the management of companies, especially when they have their name on the front of the building, tend to think of these businesses as their own. They don’t belong to the managements, they belong to the stockholders.”
Shareholders representing 13 million shares, or about 79% of the company, had voted at the May 7 annual meeting. The final results were announced at the reconvened meeting Wednesday.
Gollust said he would support a $1.64-billion leveraged buy-out agreement with the New York investing firm of Kohlberg, Kravis, Roberts & Co. but added that the dissident board members also would seek higher bids.
Coniston maintains that Storer has a liquidation value of between $90 and $100 a share.
Storer needed to maintain majority control of its board of directors in order to complete the Kohlberg, Kravis deal.
The definitive agreement calls for Storer, which owns seven television stations and 600 cable-TV franchises in 18 states, to merge with KKR Holding Inc., a corporation recently formed by Kohlberg, Kravis. Storer’s management would continue to run the organization.
Under terms of the agreement, each Storer common share would be converted into $75 cash, $25 face value of preference stock and warrants to purchase common stock in the new company.
Reelected incumbent board members were: Bill Michaels, retired Storer chairman; Terry Lee, president; Leslie O. Barnes, retired chairman of Ryder System Inc.; Jack R. Borsting, dean of the University of Miami School of Business Administration, and Peter Storer.
Elected dissidents were: Gollust, Paul E. Tierney Jr. and August K. Oliver II, general partners of Coniston, and David H. Strassler, former chairman of UA-Columbia Cablevision Inc.
