Kaiser Again Urges Rejection of Frates Bid
The management of Kaiser Aluminum & Chemical on Thursday sent another letter to shareholders urging them to reject a move by an investor group to oust the Oakland-based company’s board of directors and replace it with its own slate.
Oklahoma investor J. A. Frates, who heads the group that is mounting a hostile takeover bid for Kaiser Aluminum, branded the letter as the “same old stuff.”
Kaiser Aluminum Chairman and Chief Executive Cornell C. Maier and President A. Stephens Hutchcraft Jr. said in the letter that, after reviewing the Frates group’s consent solicitation materials, “we . . . believe more strongly than ever that this group’s so-called ‘proposal’ is nothing more than a series of ‘campaign promises’ designed to get your vote without committing the group to any transaction or course of action.”
‘Significant Uncertainties’
The Kaiser executives said, among other things, that the Frates group has admitted that its $21.50-per-share proposal is subject to several “significant uncertainties,” including the ability to sell $400 million in subordinated debentures to finance the cash portion of the proposal and whether the offer will actually be composed of $8 in cash and $13.50 in securities, as proposed.
Frates said in an interview that he is confident that the group’s investment banker, Bear, Stearns & Co., will be able to finance the takeover bid even though Kaiser Aluminum is already heavily burdened with debt.
“Bear, Stearns is very jealous of their position in the banking community and of their reputation and clearly would not (put) their name to such a transaction as this if they were not . . . certain that they could do the transaction,” Frates said.
The conditions included in the offer “are normal caveats,” he said, adding that “nothing can be guaranteed at this time” because Kaiser Aluminum hasn’t given the group access to its books. “But we’re very comfortable that the proposal as now structured would be essentially what would be offered at the appropriate time,” Frates said.
