10-Year Wait Ending
It has been more than 10 years since Royal Inns of America went bankrupt in San Diego and it has been about eight years since shareholders in the fallen company filed a class-action lawsuit alleging fraud and securities laws violations.
But a court date has finally been set--Nov. 13 before U.S. District Judge Leland C. Nielsen.
The primary defendant is the accounting firm of Peat Marwick & Mitchell, which the plaintiffs allege helped violate securities laws through accounting and auditing failures.
Up to $48 million in damages and interest reportedly is being sought.
The case matches the law firms of Milberg Weiss Bershad Specthrie & Lerach, the noted shareholder litigators, against Gibson, Dunn & Crutcher, the established corporate law firm.
Fenton Loses Draw Some people get gold watches when they step down. But Martin Fenton, the veteran Christiana executive whose power has eroded steadily in the past year, wasn’t so lucky last week: He got to announce the company’s biggest ever loss, $2.3 million for the year ended June 30.
That was on the first page of a two-page announcement. The second page disclosed that Fenton, who had been quoted earlier in the news release, had resigned as president and that six company directors had stepped down.
The company, which has moved its headquarters from San Diego to New York and has redirected its focus from real estate investment to retailing, is now controlled by Texas investor John Roberts, who owns 39% of Christiana stock. Roberts’ associate, John P. Holmes, was named president-elect to replace Fenton.
Sources close to the company believe Fenton will step down as a director early next year.
Grissom to Stay
San Diego Chamber of Commerce President Lee Grissom has officially ended weeks of speculation that he will be tapped as the state’s new secretary of business and transportation.
Late last month, Grissom told Gov. George Deukmejian’s staff that he wasn’t interested in the post, which became vacant when Kirk West resigned to become head of the California Chamber of Commerce.
Grissom nonchalantly made his decision public recently in his “Perceptions” column, mailed to chamber members every other month. Commenting on his 10th anniversary as head of the local chamber, Grissom off-handedly closed with, “I intend to stay on a while longer.”
Grissom said Monday that the prospect of relocating his school-age children was the prime reason for turning down the job.
“I put the question to the family at the dinner table,” he said. “The vote was none in favor, five opposed and I abstained.”
The only debate, Grissom said, was who would get the proxy vote for his 17-month-old son. “My wife won,” he quipped.
No-Fault Parting
The corporate marriage between World Communications Inc. President Jay Kholos and Executive Vice President Ed Schmidt, former president of Capital Bank of Carlsbad, lasted only a couple of months.
Kholos, the entrepreneur who is steering the fast-growing WCI (projected revenues of $50 million this year), hired Schmidt, the button-down banker type, ostensibly to lend a conservative philosophy to Kholos’ otherwise run-and-gun marketing philosophies.
The hire was also seen as a move to help legitimize the Carlsbad-based marketing company, which has had great success selling mail-order record albums but has run into problems with the U.S. Postal Service over its Grapefruit 45 mail-order diet plan.
Both men concede “professional philosophical differences” over how to run the company and maintain that there is no personal animosity.
Kholos quipped: “We’re both right, except that I own the company.”
UCAN Struggle
Who says community activists can’t make corporate-type management decisions? Not Jay Powell, chairman and founding director of the Utility Consumers Action Network (UCAN), the citizens “watchdog” group that monitors San Diego Gas & Electric.
Last month, the board, in a 5-4 vote, fired Executive Director Garry DeLoss. That action sparked the resignation of two dissenting board members.
Now, Powell, who helped lead the DeLoss ouster, has offered to step down as chairman because, he admitted, he could have prevented the two directors’ resignations had he been “in closer touch” with them.
Powell’s other activities--he’s one of two paid Sierra Club staffers, he’s on the steering committee of the Prop. A growth management initiative, and he’s the father of three children--meant that he “couldn’t put the time in” that the job requires.
“If I had been in closer touch with (the resigning directors),” offered Powell, “they would have felt more involved in the decision, even if they had disagreed.”
Revolving Stocks
Developer Doug Manchester’s La Jolla Bank & Trust building loses its third stock broker client next week as Merrill Lynch Pierce Fenner & Smith vacates the premises and hangs its shingle at Victor Fargo’s new office building (home, eventually, for Sun Savings & Loan, as well).
Last year, Paine Webber moved out of the building, as did the facility’s most infamous client: J. David & Co.
But the building may not be without a brokerage house for long. Industry sources say that Dean Witter is being wooed as a tenant.
Hanging by a Cable
Talk about market penetration! Cox Cable San Diego, the nation’s largest cable system, reaches about 66% of its potential audience--about 260,000 customers out of 400,000 possible clients.
Typically, a 30%-to-50% penetration is considered excellent.
But Cox officials refuse to be complacent. They’ve launched a direct-mail drive to lure non-subscribing homes.
If all potential customers signed on to Cox, there would be only 22,000 homes that Cox currently couldn’t serve because of lack of cabling, according to Moya Gallaher, director of marketing.
“We’d be happy if we got (an increase) of a couple of points in the next couple of years,” she said. “We want to attract those people who have never had cable and we want to reattract our former customers who’ve disconnected.”
Disconnects are indeed a concern to Cox and other cable operators. The disconnect rate for basic cable service is about 3%. But pay-service disconnects for programs such as Home Box Office, Showtime, the Disney Channel and the Playboy Channel are much higher--about 77% in San Diego.
In other cities, Gallaher said, pay service disconnects run as high as 110%.
And why is San Diego so heavily cabled? Long before the national cable craze, the only way for most county residents to pick up more than four local stations was via cable, leading to a big demand for the service.
