Frates Group Seeks to Oust Kaiser Aluminum Board
A group that includes Oklahoma investor J. A. Frates and British investor Alan E. Clore said Tuesday that it will try to remove the board of Kaiser Aluminum & Chemical and substitute a slate of directors that will approve the group’s hostile takeover bid.
Meanwhile, Oakland-based Kaiser Aluminum posted its fourth consecutive year of red ink, reporting a $186.5-million net loss for 1985, compared to a $97.4-million loss the year before.
The 1985 net loss, the biggest in the company’s history, included $124.2 million in asset write-downs and other non-operating charges, compared to $60.7 million in after-tax loss provisions in 1984.
In the fourth quarter, the company had a net loss of $107.8 million versus a 1984 profit of $3.9 million.
The company said it had operating income of $23.5 million in the latest quarter before write-downs and other charges, compared to an operating loss of $16.1 million in the 1984 period.
In a filing with the Securities and Exchange Commission, the Frates group said it will seek to oust the Kaiser Aluminum board through a consent solicitation process, which allows shareholders to vote on a proposal even though no shareholders meeting is held. Kaiser Aluminum’s bylaws require that only management can call a special shareholders meeting.
The Frates group, which owns 18.6% of Kaiser Aluminum’s stock, said in September that it intended to gain control of the company and to “recapitalize and restructure” it. Kaiser’s board rejected the Frates group’s $20-per-share bid, which offered $7 in cash and $13 in securities for each of Kaiser Aluminum’s 44.1 million shares outstanding.
“Our hope had been always that the company would enter into good-faith negotiations with us,” said Leonard T. Conway, a member of the Frates group. “We would have preferred a friendly negotiated transaction.”
The Frates group said it also filed suit Tuesday in Delaware Chancery Court seeking to overturn provisions in Kaiser Aluminum’s bylaws. Those provisions require a 15-day notice before establishing the record date of who can vote in the consent solicitation and require that all votes be counted on the 31st day after materials are mailed rather than the usual 60 days. In addition, the Frates group sent Kaiser Aluminum a letter requesting its shareholder list.
Kaiser Aluminum said in a prepared statement that it will “vigorously oppose” the Frates group’s action.
“Kaiser Aluminum’s board and management have previously thoroughly reviewed Mr. Frates’ highly speculative and conditional proposal, as well as the credentials of his group, and have found that they have nothing at all to offer Kaiser Aluminum shareholders.
