Group Tries to Put a Damper on Speculation in Sierracin

A group led by Sierracin Corp. Chairman Christoph Tribull recently said it might make an offer to buy the 50% of the Sylmar aerospace-parts concern it does not already own. But the group did not propose a price it might pay.

That left Wall Street to guess, and the guessing game that ensued sent Sierracin’s stock soaring in heavy trading.

Last week alone, the stock surged $4.625 a share, or 61%, to $12.25 a share on average daily volume of 26,900 shares, about 10 times the stock’s daily average during March. Only two months ago, the stock sold for $6 a share.

So on Monday, as the stock continued climbing on the American Stock Exchange, the Tribull group tried to throw cold water on the price speculation. It announced that if it makes an offer, it “is considering” a price of $15 a share, or $25.5 million. The group also reiterated that there is no guarantee it will make a bid.

Bidding Continued

Wall Street apparently has little doubt that a deal is coming, although it remains to be seen whether the group’s announcement keeps a lid on the stock’s market price. After the announcement Monday, investors continued to bid up the stock. It gained $1.75 a share on the day to close at $14 a share, with trading again heavy at 34,500 shares.

Why indicate a price if no formal offer was ready? Tribull and other Sierracin executives referred all questions to an outside public-relations spokesman, who said the group feared “that people have an exaggerated notion of what’s going to be paid, so they felt compelled to get the price out.”

“They wanted to see the record set straight before the price got out of hand,” the spokesman said.

With nearly half of its shares held by management, Sierracin’s stock normally is thinly traded. And for that reason, Sierracin is paid little heed by Wall Street analysts or institutional investors.

Besides Tribull, who owns 44% of Sierracin, the group studying a takeover includes Asahi Glass Co. of Japan, which holds 6% of the company. Sierracin, which makes aircraft windows, motors, coatings and seals, earned $3.11 million last year on sales of $82.7 million.

Stockholders’ Suit

Tribull and other members of the group have declined comment on why they are considering a bid. But they have said an offer would be conditioned on whatever terms Sierracin reaches in settling a stockholders’ lawsuit that was filed in July, 1987.

The suit, filed by Herbert and Euretta Hastings, who own about 7.4% of Sierracin, accused Tribull and other company officers of fraud, mismanagement and use of corporate assets for personal benefit. The Hastings wanted Tribull ousted and a court-appointed receiver to manage Sierracin. Tribull and the other defendants denied any wrongdoing.

At the same time, Sierracin asserted that the Hastings had threatened legal action if the company did not buy their Sierracin stock for $17.14 a share, or $4.25 million. The Hastings denied that charge, saying Sierracin was trying to divert attention from the Hastings’ suit.

As of Monday, no settlement had been reached with the Hastings, the Sierracin spokesman said. In addition, Sierracin noted that any settlement--and subsequent takeover bid--will be subject to court approval.