Zenith Fights for Its Independence
Zenith Electronics Corp. urged owners of its 27 million shares Wednesday against siding with dissidents bent on dismantling the last major U.S. television manufacturer.
In a letter, Zenith Chairman Jerry K. Pearlman acknowledged that the Chicago-area company “has had some rough times in the past several years, rough for all of us shareholders and also for our employees.”
But Pearlman said the investor group Brookhurst Partners “has no experience whatsoever in our business.”
“To suppose that they could come in and consummate a transaction in the best interests of shareholders more quickly than Zenith’s experienced management and board . . . is, in our opinion, absurd,” Pearlman said in the letter.
Zenith shareholders have until Dec. 4 to return signed consent forms to Brookhurst Partners, indicating their support for Brookhurst’s plan. The limited partnership, led by New York stock market speculators Herbert B. Abelow and Nicholas L. Ihasz, has proposed to reduce the size of Zenith’s board to six from 10--dumping Pearlman in the process--and to have three of its own people named to the board.
Stock Rises
The Brookhurst bloc would be committed to selling Zenith’s foundering consumer electronics division or, failing that, to selling the entire company, which also manufactures highly regarded personal computers.
Brookhurst has said its proposals would become effective if they receive the backing of a majority of Zenith shareholders.
On Wednesday, Brookhurst had no response to Zenith’s letter, said spokesman William Jenks in New York.
In trading on the New York Stock Exchange on Wednesday, Zenith rose 62.5 cents a share to $17.625.
Brookhurst, Zenith’s largest shareholder, has accumulated 6.1% of Zenith’s stock since the partnership was formed in the spring.
Zenith has contended in a pending lawsuit in U.S. District Court in Chicago that Abelow and Ihasz are interested only in boosting the value of Zenith’s stock so they can sell their shares at a profit.
Thus, Zenith claims that Brookhurst is defrauding other shareholders with its consent solicitation.
Zenith also contends that Brookhurst’s public statements and letters to shareholders have contained specific misstatements of facts.
Brookhurst has denied any wrongdoing.
