Brothers Call Offer to Buy Golden West ‘Inadequate’

Two Golden West Homes shareholders who recently boosted their joint stake in the Santa Ana-based manufactured-housing company to 5.2% are claiming that builder and AirCal Chairman William Lyon has undervalued the company in a $12.4-million cash offering for all 2.5 million shares of Golden West’s outstanding common stock.

Brothers Michael and Roy Doumani have requested a reappraisal of Golden West’s value by the Los Angeles-based brokerage firm of Bateman Eichler, Hill Richards Inc., which already has deemed Lyon’s offer of $5 per share to be a fair valuation. The offer is to be voted on at Golden West’s shareholder meeting April 16.

Valuation Review

Michael Doumani is senior vice president of Los Angeles’ other major brokerage--Morgan, Olmstead, Kennedy & Gardner--and Roy Doumani is chairman of the World Trade Bank in Beverly Hills. The brothers want Bateman Eichler to review its valuation of Golden West, taking into account a number of factors, including the drop in mortgage rates that is spurring a revival of home buying.

Bateman Eichler refused to comment on the matter Friday and Golden West officials did not return telephone calls.

“I just feel his (Lyon’s) buy-out offer is totally inadequate,” Michael Doumani said Friday. He pointed out that he and his brother hold 176,000 common shares of Golden West, including 36,300 shares they purchased between Feb. 18 and March 11 at prices ranging from $4.63 to $4.75 a share. He said the two may buy even more Golden West stock because they believe it is “grossly” undervalued.

A holding company controlled by Lyon, chairman of the Newport Beach-based William Lyon Co., a major Southern California home builder, has offered to pay $5 a share for all outstanding shares. Lyon--who also is chairman of Newport Beach-based AirCal, already owns 26.9% of Golden West’s common stock and serves as that company’s chairman.

Lyon’s offer for the remaining Golden West stock has been unanimously approved by Golden West’s directors. It will be voted on April 16.

Lyon’s original offer last November of $3.75 per share was rejected by a three-member special committee of Golden West directors, who previously had been advised by Bateman Eichler that a fair price for the company’s stock would be between $5 and $6 per share. In response, Lyon raised his offering price in late December to the current level.

‘Worth More’

“I personally feel the company was worth more than $5 a share back in November and I certainly feel it is worth more than $5 a share today,” Doumani said. He added that Golden West’s financial prospects have greatly improved with the decline in mortgage rates since November.

In addition, he said he believes that Golden West’s stated book value of $2.30 a share is at least $3 a share too low, citing the company’s $19.7 million in appraised real estate holdings which are carried on the company’s books for about $8.5 million.

He said that Golden West’s $6.3-million tax loss carries forward and would be attractive to anyone trying to take over the company, adding that it would be useful for sheltering Golden West’s future earnings.

Another attractive feature of Golden West, Doumani said, is that Lyon, whom he called “a very bright man,” has taken the helm of the company and positioned it for the future by writing down inflated assets. “Now you have a company that’s clean from a financial standpoint,” he said.

Net Loss

Golden West posted a net loss of $164,000 for the second fiscal quarter ended Nov. 24, compared with a loss of $1.99 million for the same period the year before. Sales increased to $16.9 million, from $25.4 million a year earlier.

For the first fiscal half, Golden West had a net income of $2,000.