Officials of AFG Must Give Up 482,585 Shares
The president of Irvine-based AFG Industries Inc. and other insiders were paid too much when they merged two failing glass companies to form AFG in 1978 and now have to give back 482,585 shares of common stock under terms of a court ruling.
The company said it will cancel the shares being returned by President R.D. Hubbard and others, which collectively represent a 4.7% reduction in the number of common shares outstanding, said AFG Treasurer Gary Miller.
Miller said the effect of the canceled stock was “insignificant in terms of control of the company” and should increase the value of the remaining 9,620,513 shares outstanding. Industry analysts agreed that control would not be affected.
The move to cancel the shares follows a Delaware Supreme Court decision last July 16 that upheld a lower court judgment against Hubbard’s former operating company, Fourco Glass Co. of West Virginia, and its parent holding company, Float Inc.
Fourco owned 56% of Tennessee glass manufacturer ASG Industries, and Hubbard, acting as a “white knight,” acquired all of ASG and merged the companies to form AFG.
As part of the merger and before the name change, ASG issued 4.5 million new shares of stock to Fourco shareholders for 100% of Fourco, raising the total number of ASG shares outstanding to about 7.5 million, Miller said.
The losing bidders, Leo and Muriel Zuckerberg, who owned about 25% of ASG before the merger, Miller said, ended up with about 15% of the new company.
They and their glass-importing company, Associated Imports Inc., sued the Fourco shareholders to rescind the merger. A Delaware Chancery Court refused to set aside the transaction but found that ASG paid too much, in the form of shares, to Fourco shareholders, and that those shareholders would have to return 482,585 shares, Miller said.
The only remaining issue, he said, is whether AFG will have to pay the Zuckerbergs’ legal fees and costs. Miller would not say how much AFG or the Zuckerbergs spent on the suit.
Currently, he said, Hubbard owns about 20% of the shares and theZuckerbergs have about 10%.
Hubbard could not be reached.
AFG is one of the country’s leading manufacturers of both float glass and rolled flat glass, primarily for residential and commercial construction markets. The company makes and sells a diverse line of fabricated glass products such as solar, insulated, safety tempered, ornamental and lighting glass for U.S. and overseas markets.
