Hopes to Boost Stock Price, Thwart Takeover : Troubled BankAmerica Unveils Restructuring Plan

BankAmerica on Friday unveiled a restructuring plan designed to hasten the ailing giant’s return to profitability, bolster its stock price and thwart First Interstate Bancorp’s acquisition bid.

The move came just three days before Los Angeles-based First Interstate’s board is scheduled to meet to consider its next move in the takeover drama.

First Interstate has offered to acquire BankAmerica--parent of Bank of America, the nation’s second-largest bank--for a package of securities that First Interstate values at $3.4 billion, or $22 a share. Earlier this month, BankAmerica asked First Interstate to withdraw the proposal.

Significantly, BankAmerica said Friday that the planned restructuring would boost the company’s book value--or assets minus liabilities--to $24 a share by the end of 1987 from the current level of $21 a share. Thus, the restructuring plan would give BankAmerica some ammunition in arguing against any hostile tender offer or proxy fight that First Interstate might launch.

Projections Questioned

First Interstate declined to comment Friday pending a study of BankAmerica’s plan.

However, a source close to First Interstate noted that “they have made projections before”--a reference to BankAmerica’s repeated failure to accurately predict the timing of an earnings turnaround under former President and Chief Executive Samuel H. Armacost.

The broad outlines of the restructuring program have been dribbling out since last month, when A. W. Clausen was called back by BankAmerica’s directors to lead the company he ran in the 1970s. BankAmerica’s announcement Friday fleshed out that outline with some specifics. They include:

- A plan to shed more than $10 billion of the company’s $114 billion in assets for net gains of more than $450 million.

- A goal of boosting BankAmerica’s ratio of primary capital to assets to more than the 7.25% average for the nation’s largest banks. That key ratio stood at 6.29% at the end of the third quarter.

- A program to eliminate 5,000 workers from BankAmerica’s payroll in 1987, excluding those who are shed through the sale of businesses.

Program Has Two Objectives

In announcing the program, Clausen said BankAmerica’s refocused strategy has two objectives. “First, we intend to be the premier provider of retail and wholesale banking services in the Western United States,” he said. Second, “We intend to be a pre-eminent international bank offering a wide range of wholesale services in the United States and world markets.”

Activities that don’t contribute to those “core objectives” will be considered for divestiture or discontinued, he said. As reported, BankAmerica has put its Charles Schwab & Co. discount brokerage unit and its European retail banking operations up for sale.

Clausen acknowledged that loan losses have been running at “an unacceptably high rate” but said the company expects to be reducing the amount of loans it writes off in 1987 and beyond.

Clausen set no timetable for restoration of the dividend on BankAmerica’s common stock, saying that the company must first restore its capital base and have sustained earnings from operations.