Golden West Vote on Lyon Bid Is Delayed by Limited Turnout

William Lyon’s bid to take over Golden West Homes was delayed Wednesday when not enough of the company’s shareholders bothered to vote on the $5-per-share, $12.5-million acquisition bid.

Golden West directors told shareholders gathered for the special meeting at the Airporter Inn that they would delay a vote count until next Monday in hopes of obtaining additional proxy votes. About 36% of shares eligible to be voted were not cast. It was not clear how many of the shares that were voted were in favor of the takeover proposal.

The directors’ decision to postpone a vote was announced to shareholders after a lively discussion of the merger proposal in which several shareholders challenged the directors’ recommendation to accept Lyon’s offer for the Santa Ana-based maker of manufactured housing and mobile homes.

Golden West attorney John R. Stahr said that individual investors representing 300,000 shares of the company stock had failed to return proxies and, in addition, brokerage firms handling accounts representing 600,000 company shares had filed abstentions, presumably because their clients had not given them voting instructions.

Company spokesman James K. White said that the number of abstentions was large, considering the importance of the issue.

Before next Monday, Stahr said, proxy solicitors will be telephoning brokerage houses and shareholders to encourage them to cast their ballots. In the meantime, he added, shareholders who have already sent in their proxies may decide to change their votes.

At Wednesday’s meeting, Golden West President and Chief Executive Officer Harry Karsten Jr. urged the stockholders to let Lyon take over the company, which, he pointed out, has “suffered four straight years of losses.” During that period, the company lost about $11 million.

Even the recent decline in mortgage interest rates has proven to be a “double-edged sword,” Karsten said, because the rates have dropped more sharply for conventional homes than for mobile homes. He said that although lower interest rates have enabled people who want to move into mobile homes to sell their conventional dwellings, the rate structure has made single-family homes and condominiums more attractive to home buyers who otherwise might have preferred mobile home living.

Karsten said that Golden West has suffered from a long and dramatic downturn of the mobile home market on the West Coast--which he said has just begun to revive--and by a mistaken emphasis on developing manufactured housing, which he said so far has proven economically non-competitive with traditional housing.

‘Cannibalizing Itself’

Tony Frank, another Golden West director, said that Golden West is “cannibalizing itself” by selling and mortgaging its facilities in order to bolster its earnings. “It is pretty clear to me this is not a company that can stand on its own two feet anymore,” Frank declared.

Some shareholders, however, said they believed that Golden West’s stock has been undervalued and suggested that lower interest rates could set the stage for the company’s financial rebound.

James O. Johnston, a small Golden West shareholder and vice president of the brokerage firm of Kidder, Peabody & Co., pointed out that the stock of mobile home manufacturing firms nationally has increased 50% in value since the end of 1985. He contended that the Lyon offer is too low. “I think it has been a cap on the stock (of Golden West), frankly,” he said.

“If Golden West is in such lousy shape, then why are you interested in buying it?” another shareholder demanded of Lyon. In response, Lyon said only that he has explained his motives in the proxy statement.

Greater Flexibility Sought

The proxy statement says that the William Lyon Co. intends to take Golden West private.

Among the expected benefits, the proxy says: “Private ownership would permit management greater flexibility in managing the company and would enhance management’s ability to act quickly and efficiently to respond to the company’s business needs.”

But it was apparent Wednesday that even if Lyon’s offer is ultimately accepted, at least some shareholders may fight for a higher price for their stock in court.

Before Wednesday’s meeting, Michael Doumani, who, with his brother, Roy, holds 176,000 common shares of Golden West, said that he probably would assert his dissenters’ rights and have the “fair market value” of his shares determined in court, rather than accept a price of $5 a share.