Belzbergs May Seek Control of Countrywide Credit Industries
An investment group controlled by the wealthy Belzberg family of Canada disclosed Monday that it may seek control of Countrywide Credit Industries, a Pasadena mortgage banking concern.
In a filing with the Securities and Exchange Commission, the Belzbergs said they have acquired 6.6% of Countrywide as an investment but may seek control of the firm through an exchange offer or merger, or they may seek representation on Countrywide’s board.
David S. Loeb, Countrywide’s chairman and president, would not comment on the Belzberg’s disclosure. He said the Belzbergs have not discussed their plans with him.
Countrywide is among the nation’s largest publicly held mortgage banking firms in an industry where most firms are privately held. Ranked 27th overall by American Banker in June, Countrywide has 104 branches in 26 states. Besides the mortgage business, it owns Countrywide Thirft & Loan, an industrial loan company.
Founded in 1969, the firm has grown rapidly and remained profitable despite the wide swings in interest rates over the last several years. David Hochstim, an analyst in San Francisco with the investment firm Shearson Lehman Hutton, said Countrywide has low operating costs and is aggressively managed. It earned $15.5 million and had revenue of $80.6 million for the fiscal year that ended Feb. 28, 1987.
Last year, Countrywide survived a drop in interest rates by offering to refinance older mortgages, thereby keeping its customers from shopping for a lower interest rate from a different mortgage bank. Many less-aggressive mortgage banks lost business to competitors when rates fell, Hochstim said.
Analysts said Countywide was vulnerable to a takeover since it lacks takeover defenses, such as a so-called poison pill. Also, analysts said, last October’s stock market crash made its stock a bargain. Countrywide shares, which traded at around $9 before the crash, closed Monday at $8.125, up $1.375, in composite trading on the New York Stock Exchange.
However, a large block of shares is owned by company insiders and that could be an obstacle to a takeover. Countywide’s officers and directors own a 17.5% stake, including Loeb’s 8.4%.
Hochstim said any purchaser will have to persuade Loeb and Countrywide Vice Chairman Angelo Monzilo to remain under new ownership. “Those two built the company from nothing,” said Hochstim. “Without them, you have much less of a company.”
The Belzbergs, who control an empire in financial services and real estate, said their investment group owns 1.053 million Countrywide shares, including 1.003 million shares purchased between Nov. 20 and Jan. 27 for $5 to $6.50 a share. Other group members are three Belzberg-controlled financial institutions--American Capital Fidelity Corp., Far West Savings & Loan Assn. and Far West Financial Corp.--all based in Newport Beach.
