Investor Group Keeps Alive Its Bid for Kaiser : Reserves Right to Name Own Slate of Directors

The attempt by an investor group to take over Kaiser Aluminum & Chemical remained alive Thursday after the investors--headed by Oklahoma investor Joseph A. Frates--reserved the right to nominate its own slate of directors at the company’s annual meeting April 29.

However, the group’s spokesman, Leonard T. Conway, emphasized that the move was taken to retain the option and not to declare war. “It’s like registering to vote,” Conway said. “You may decide not to vote, but without registering you cannot vote.”

Kaiser’s deadline for preserving the option of offering an opposing slate is March 29, he said, adding: “We have not made a formal decision whether we will seek to nominate the 11 members or not.”

Rejection Announced Sunday

Last Sunday, Kaiser reported the failure of the group to obtain the consent of a majority of the shareholders to exchange the current board of directors for one made up of its own nominees--including Frates. “We beat them and we beat them big,” President Steve Hutchcraft said.

In a statement Thursday, Chairman Cornell A. Maier added that shareholders “obviously shared our serious concern about the speculativeness and conditionality of the . . . group’s proposal.” Kaiser intends “to fight just as hard in this new contest to protect our shareholders interests,” he said.

In his first comment on the earlier contest, Conway on Thursday countered that the investors, who hold 21.5% of Kaiser’s outstanding stock, undertook the relatively rare consent procedure knowing that the campaign would be “very uphill.” Success, he pointed out, required approval by a majority of all shareholders, while a proxy fight requires only a majority of voting shareholders.

The group realized that shareholders considered the original buy-out offer of $21.50 a share--only $8 of it in cash--to be inadequate, he said. (Indeed, it was overtaken by Kaiser stock’s rise to $23 on Thursday, up $2, on trading of 376,000 shares.) But the group said it might make an improved bid directly to shareholders.

Conway also mentioned the possibility of including additional partners, entering into arrangements with third parties and selling all or part of their stake in the company.

‘Central Elements’ Backed

But the unsuccessful consent campaign “absolutely” advanced the Frates group’s takeover campaign, he insisted. The pressure that it generated helped persuade the company to cut back the scope of announced plans to raise new capital and make a major acquisition. Shareholders also supported the “central elements” of the group’s strategy for restoring Kaiser to profitability by concentrating on its core aluminum and industrial operations, he said.

Nonetheless, Sean St. Clair, who follows Kaiser Aluminum for Duff & Phelps in Chicago, was unimpressed by the investors’ move unless they improve their bid. “I don’t see where that offer has any appeal,” he said.

Separately, in a letter to shareholders, Kaiser predicted a return to profitability this year, which would reverse four years of losses totaling $471.3 million. It based its prediction on a reviving aluminum industry and expected cost savings from belt-tightening programs and a renegotiated contract with the United Steelworkers. These savings could amount to $500 million by 1989, the company said.