Maxxam Says It Can Gain Control of Pacific Lumber : Potlatch Rejects Belzbergs’ Offer

Directors of Potlatch Corp. unanimously rejected a cash offer from First City Financial Corp. to buy all Potlatch shares at $45 per share and voted to repurchase up to 20% of the company’s stock, the company reported Monday.

At the same time, Maxxam Group said its tender offer for Pacific Lumber had garnered enough shares for Maxxam to gain control of the forest products concern.

Potlatch’s board also authorized the repurchase of the company’s shares through open-market or private transactions “to frustrate” First City.

The unsolicited tender offer was made through First City by the Belzberg family of Canada.

“In taking these actions, the board concluded that the interests of stockholders and other constituencies would be served best by the continued independence of the company,” said Richard B. Madden, chairman and chief executive.

“The board decided, in view of the prolonged depressed condition of the forest products industry and the substantial investment Potlatch has made in its future, now would be a poor time to sell the company,” he said.

The company’s financial adviser, Goldman, Sachs & Co., advised the directors that the $45-a-share offer was “inadequate,” a company statement said.

Intended to Frustrate

“The stock repurchases are intended to frustrate the efforts of First City to acquire control of the company and to facilitate the sale of shares by those shareholders who wish to sell at this time,” Madden said.

The First City transaction would be a taxable transaction for stockholders, Madden said.

The company announced that none of its directors or executive officers intends to sell shares during the repurchase program.

A special meeting of stockholders is set for Dec. 12. The company is proposing a time-phased voting amendment that generally would give beneficial holders of common stock four votes per share as of Dec. 12.

Stockholders who purchase shares after Dec. 12 and hold them four years would also be entitled to four votes per share. Until the shares are held for 48 months, they would entitle their holders to one vote.

Madden explained that the company considered it very important to foster an atmosphere in which directors and officers can make decisions in the long-term interests of the company and its shareholders. “To this end, the amendment seeks to give long-term stockholders a greater vote in the company’s affairs than short-term stockholders,” he said.

Belzbergs Filed Suit

The Belzberg family has filed a lawsuit designed to block the anti-takeover device.

“As we stated in our proxy statement, long-range planning and the dedication of the company’s resources to long-term goals has been emphasized at the company for many decades, and management believes these practices have been a factor in ownership by many long-term stockholders,” Madden said.