SEC Probes Management of Allegheny
Allegheny International Corp. is telling shareholders that federal regulators are taking testimony from its employees about management practices, and may take action against the company.
Allegheny International said the Securities and Exchange Commission informed it of the agency’s intentions after the company announced a plan for First Boston Corp. to put the appliance maker in private hands in a $500-million leveraged buyout.
Pittsburgh-based Allegheny International described the SEC investigation in a statement filed with the SEC in Washington and distributed to shareholders beginning Friday.
“We have been cooperating with the SEC, providing it with information and material and we continue cooperating with it,” company spokesman Edward M. Romanoff said Wednesday in Pittsburgh.
In various federal and local lawsuits, shareholders have challenged corporate spending under ousted Chairman Robert J. Buckley. They have also attempted to block the First Boston deal, saying the investment banking firms’ $24.60 per share tender offer launched on Friday is inadequate.
Shareholders also claim the buyout was planned in part to absolve individual defendants from legal liability, and they claim company officials may have violated securities laws in connection with public disclosure of material information about the company and in the distribution of proxy material related to the election of directors.
Allegheny International, best known for its Sunbeam and Oster appliance businesses, said it will defend itself vigorously against the accusations.
The company has been struggling to satisfy debts estimated at $800 million to $1 billion and reported a net loss of $164 million on revenue of $1.31 billion in 1986.
Meanwhile, the SEC began an inquiry into related matters in early 1986. In August, 1986, the month Buckley resigned under fire, the SEC ordered a private investigation, the company told shareholders. The SEC probe covers spending for “real estate . . . the use of corporate aircraft, travel and entertainment.”
After Allegheny International announced the First Boston plan, “the company was informed by the enforcement division of the commission that it intends to seek authority from the commission to institute a proceeding against the company,” according to the statement.
SEC spokesman Chiles Larson declined comment Wednesday about the Allegheny International case. The company did not say what action was contemplated by the enforcement division.
