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Frates Group Again Raises Bid for Kaiser

Times Staff Writer

After weeks of silence, an investor group that is attempting to oust the board of directors of Kaiser Aluminum & Chemical and take over the Oakland company raised its offer Friday to $28 per share in cash and securities.

Kaiser Aluminum Chairman Cornell C. Maier branded the proposal by the group, which is led by Oklahoma investor J. A. Frates, a “non-offer” and “the same old garbage that he put out before.”

The Frates group proposed paying stockholders a package of about $10 in cash and $18 in securities for each Kaiser share. As in its previous two offers, the Frates group said it couldn’t guarantee the exact composition of the package because it doesn’t have access to Kaiser Aluminum’s books.

Hard to Place Value

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The securities would be debentures and preferred stock but would not include common stock, as the group had offered in its previous proposals.

The common stock was dropped because shareholders had said they had trouble placing a value on that part of the package, said Leonard Conway, a member of the Frates group, which has accumulated about 21.9% of Kaiser’s 44.4 million shares.

The Frates group’s last bid was valued at $21.50 per share, made up of $8 in cash and $13.50 in securities.

Kaiser Aluminum’s stock closed at $22.75 a share on the New York Stock Exchange, up 25 cents.

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In a letter to Kaiser management, Frates said the new offer “affords Kaiser stockholders a significant enhancement of value.”

The Frates group had been silent since late March, shortly after it failed to gather enough shareholder consents to throw out Kaiser’s board and replace it with its own slate of 11 directors.

Conway said the group had been trying to decide whether to hike its bid in light of lower interest rates, a weaker dollar, falling energy costs and improvement in the stock market, aluminum prices and Wall Street earnings forecasts for Kaiser Aluminum.

Maier said the Frates offer is “conditional and speculative.”

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“I don’t know why he didn’t go up to $40, $50, $60 or $70 per share,” Maier said. “If you’re not offering somebody something, you might as well not offer them a lot.”

The Frates group and Kaiser Aluminum’s management will face off again at the company’s annual meeting April 29. The Frates group is again nominating its slate of directors.


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