European Firm Buys 1.4 Million More Shares of Cannon Stock

Beset by a liquidity crisis and a recent sharp drop in the price of its stock, Cannon Group said Wednesday that its board approved the “acquisition” of 1.45 million of its shares by Intercorporation S.A. for $11.6 million. Cannon’s top executives, Menahem Golan and Yoram Globus, are listed as 50% owners of Intercorporation, a European firm.

Some observers said they were surprised by the Los Angeles company’s statement that its stock was being purchased for $8 a share--more than double the price at which Cannon closed on the New York Stock Exchange. The announcement was made shortly after NYSE trading closed.

After losing 40% of its value in the two preceding sessions, Cannon’s stock rose 75 cents a share to $3.625 on Wednesday.

Cannon’s announcement, which did not state whether the stock was being bought for cash, described the deal as an additional step in a financial restructuring of the company. No company officer was available to clarify the statement Wednesday.

Last week, Cannon had said in a filing that it had received $13.5 million from Intercorporation under a previously reported loan agreement.

In addition, the company’s filing with the Securities and Exchange Commission said Intercorporation had bought 887,000 shares, or 11.2%, of Cannon’s stock for $4.75 per share, or $4.2 million, on the open market between mid-May and June 8. Cannon said last month that Intercorporation “advised the company” that a financial restructuring affecting stockholders and creditors of Cannon would not be unveiled until settlement of a longstanding SEC investigation and shareholder suits over its financial accounting.