Western Fed Sells Interest in Bid to Fend Off Suitor
Western Federal Savings & Loan Assn., seeking protection against a possible takeover attempt by dissident shareholder Jona Goldrich, said Tuesday that it has a sold a 9.9% interest to Financial Trustco Capital Ltd., a financial-services company based in Calgary, Alberta.
The Canadian company paid about $5.37 million for nearly 353,900 shares of newly issued common stock, the Marina del Rey-based savings and loan said.
The move is being viewed by some industry insiders as an early shot in a wider battle involving an estimated 20 to 30 savings and loans nationwide that went public in 1983 and 1984 and have been insulated from control battles because of federal regulatory protection.
Western Federal said the Canadian company’s stock ownership will be limited to 9.9% through 1988--unless another shareholder is allowed to buy 10% or more of Western Federal’s stock. In that case, Financial Trustco Capital could seek additional shares.
Western Federal Chairman Hugh Evans Jr. confirmed that the move is partly an attempt to find a “white knight”--or ally--to combat Goldrich, who wants to buy a controlling interest in the savings and loan.
Goldrich, a wealthy Los Angeles real estate developer, and two fellow investors now own slightly less than 10% of Western Federal’s stock, but they are seeking permission from the Federal Home Loan Bank Board to acquire 24.9%.
A moratorium by the FHLBB has prohibited investors in an S&L; that went public between March, 1983, and February, 1984, from owning more than than 9.9% of the financial institution’s stock. The moratorium, scheduled to last three years, was intended to give management of these S&Ls; breathing room to run the institutions without having to worry about hostile takeovers.
The moratorium, however, proved unpopular on Wall Street, where it was seen as dampening investor interest in S&L; stocks, and it is now scheduled to lapse Aug. 1. As a result, the managements of S&Ls; such as Western Federal, which went public in January, 1984, are watching anxiously for evidence of unwanted advances by unfriendly investors.
Similar Situation
Another S&L; in this situation is CalFed, one of the nation’s largest S&L; holding companies.
The Los Angeles-based parent of California Federal Savings & Loan Assn. is a tempting target because it has been protected by the moratorium; its stock--closing at $23 a share Tuesday--is selling far below the book value of $40 per share, and its earnings prospects are excellent, according to New York research analyst Jonathan Gray.
“CalFed appears to be an exceedingly attractive investment candidate,” Gray said in a recent report.
“We have some concern about this, yes,” George Rutland, CalFed’s chief executive, said Tuesday. He added, however, that if the S&L; holding company received a good enough offer, “it shouldn’t be turned down just because the management doesn’t like it.”
The battles between Goldrich and Western Federal began in 1984 after Goldrich tried to get a seat on the board of directors in a proxy fight. He received enough votes from shareholders, but Chairman Evans rejected his nomination because Goldrich and his fellow investors had allegedly misrepresented how much stock they owned in the S&L.; Goldrich denied the charge.
Though the fight has been largely dormant since Western Federal’s annual meeting last fall, Goldrich is optimistic that the FHLBB will approve his request to buy the 24.9% interest he wants, said Terry Christensen, Goldrich’s attorney.
“Apparently, Western Federal is as ‘optimistic’ as we are,” said Christensen, who works for the Century City law firm of Wyman, Bautzer, Rothman, Kuchel & Silbert. “That’s why they have taken this action to protect themselves.”
