Kaiser Aluminum Board OKs Plan for Briton to Take Control
A group controlled by British investor Alan Clore would take control of Kaiser Aluminum & Chemical under a complex reorganization plan approved in principle Tuesday by directors of the Oakland-based company.
Clore had been an equal partner in a group led by Joseph A. Frates, a Tulsa investor who had waged a hostile attempt for control of Kaiser. Under the agreement, Frates will keep a non-voting 20% interest in an investment group to be controlled by Clore, who is to pump $140 million in additional capital into the company.
Spokesmen for the Frates group and Clore called the agreement among the investors “a friendly transaction.”
Kaiser Aluminum’s common stock closed Tuesday at $15.625 a share, up 12.5 cents, in trading on the New York Stock Exchange.
The plan, which is subject to final board approval and ratification by shareholders early next year, would create a new holding company in which Clore would serve as chairman with the right to name a majority of the board for five years. Cornell C. Maier would become the holding company’s vice chairman while remaining chairman and chief executive of Kaiser Aluminum, whose other management would also remain intact.
It calls for Clore, already Kaiser Aluminum’s largest shareholder, to pay the $140 million for 8,235,294 shares of convertible preferred stock in the new holding company and for an option to buy 2 million shares of its common stock. The preferred would be convertible into common stock, share for share, and would enjoy the same voting rights as common stock. It would also earn a 9% dividend payable in common stock or cash.
The options could be exercised only if “certain contests or potential contests for control of the holding company” were made at a price of $23 a share over the next two years, the company said.
“This arrangement will improve the financial position of the corporation,” Maier said in a statement, “and will enable all employees to again devote their full time to improving costs, quality and service.”
Kaiser Aluminum last spring rescheduled about $1 billion of its bank debt and negotiated a new $160-million revolving line of credit with a consortium of 40 banks, reducing its debt to $1.5 billion, a spokesman said. Under a business plan to be developed by Clore, the company would continue selling off assets, Maier added.
