Ex-Alpharel Chief Wants to Be Back in Driver’s Seat
Michael McGovern, who was ousted in December as chairman of Alpharel, has announced that he plans to try to regain control of the troubled Camarillo computer data storage firm even if it requires an expensive proxy battle for shareholders’ votes.
Shortly after McGovern made his announcement last week, Alpharel president and acting chief executive officer Clay Chisum resigned. Chisum, who will continue to serve as a director, refused to comment on his resignation.
But Alpharel Chairman Gene Holloway said political infighting at the company contributed to Chisum’s departure. Benjamin Brink, a consultant with H&Q; Technology Partners in San Francisco, has been named acting CEO.
n Chisum’s is only the latest in a series of resignations over three months that has left the company with temporary executives in the posts of president, CEO, chief financial officer and president of the marketing division.
In a filing with the Securities and Exchange Commission, a group of investors led by McGovern said it controls 23.1% of Alpharel’s stock and will try to gain control of the firm. In a proxy fight, a dissident group submits a slate of nominees to replace the company’s board and management. McGovern is expected to be nominated to take over as chairman and CEO.
‘Drifting Aimlessly’
“He thinks the company is drifting aimlessly and has no vision of what it wants to be,” said George Bremant, McGovern’s attorney. “He believes there are shareholders out there who agree with that.”
In a statement, McGovern said the company’s board--of which he still is a member--is “not responsive to the interests of Alpharel shareholders, but rather is following a private agenda not in the shareholders’ interest.” He refused to elaborate.
Holloway said the board opposes McGovern’s return as chief executive. “After all, he managed the company until late December, 1987,” Holloway said, noting the company’s financial setbacks.
For the nine months ended in September, Alpharel reported a $244,000 loss, contrasted with a profit of $738,000 the year before, on $10.7 million in revenue. A former executive said he expects Alpharel to report a loss for the fiscal year ended last December. Meanwhile, Alpharel’s stock has fallen from an initial offering price of $11 in June to $3.375 Monday.
Alpharel makes a complex optical-disk storage system that uses a laser scanner to read material on a printed page. The information is stored on the disk, where it can be retrieved or updated. The systems range in price from $150,000 to more than $2 million.
At the core of the company’s problems is a contract with AT&T;, which supplied the Army and Air Force with a computer data storage system put together by the two companies. The contract accounted for 91% of Alpharel’s $13.9 million in sales in 1986, but it will expire in September and is not being renewed. In an effort to cut costs, Alpharel has laid off about one-third of its work force since January.
Alpharel is scrambling to find new business in the commercial sector, but it means competing against much larger firms such as Eastman Kodak and Wang Laboratories.
“AT&T; was a mixed blessing,” said Holloway. “It was very valuable in getting the company going and yet a fairly large percentage of revenue came from that contract. When it expires, it leaves a void.”
Despite McGovern’s intentions, he faces considerable opposition from Lockheed Corp., which owns 12.7% of Alpharel’s stock.
“His return to the company, as far as we’re concerned, would be catastrophic,” said Glenn Williamson, director of diversification for Lockheed. “I can’t imagine the company succeeding if Mike McGovern comes back and takes control.”
“We would like to work something out on an amicable basis if that’s possible,” Holloway said. Unless an agreement is reached beforehand, McGovern’s proxy battle will be decided at the company’s annual shareholders meeting scheduled in May.
At the moment, Alpharel’s great hope is to land a contract with the Navy, which is looking for a contractor to supply it with the same kind of optical systems that Alpharel and AT&T; sold to the Army and Air Force. Alpharel has teamed up with Unisys, the $9-billion computer company, to bid on the $70-million contract. The Navy is expected to award the contract this year.
Unisys officials declined to comment on McGovern’s recent challenge.
But Merrill Lynch analyst Phillip Brannon said: “It’s not a plus. This is not a good thing that is happening.”
