Simmons Seeks to Bar Lockheed ‘Greenmail’ : Aerospace: The move may be intended to quell criticism that the investor wants a payoff. The company says it has never engaged in the practice.
In a move apparently designed to answer criticism that he is seeking a payoff from Lockheed, Harold C. Simmons said Tuesday that he will propose to shareholders that the aerospace firm be restricted in any payment of “greenmail.”
Simmons, who owns 18.9% of Lockheed shares through NL Industries, a Texas company that he controls, is waging a proxy battle to take over the Lockheed board of directors with a rival slate that he leads. The proposal, along with Simmons’ slate of director nominees, will be voted on at the Lockheed annual shareholders meeting March 29.
A Lockheed spokesman, responding to Simmons’ latest move, said, “We have no intention of paying greenmail to anybody. We have never paid it before, and we do not intend to start now.”
Greenmail is the purchase by a company, usually from a hostile corporate raider, of shares at a price higher than the market value. As the price of Lockheed stock has declined, Simmons has suffered paper losses estimated at $43 million during the last year, prompting speculation he wants a bailout.
The Simmons proposal, however, provides an exception that would permit the payment of greenmail to shareholders who have held Lockheed stock for more than two years, raising questions about Simmons’ motives.
On Monday, Simmons disclosed that he has asked Lockheed to drop a poison-pill takeover defense, in which the company would issue additional shares to existing shareholders if any individual acquires more than 20% of the outstanding common stock.
The Simmons proposals will be contained in a proxy statement that NL is expected to issue shortly, containing its nominations for the 15-member Lockheed board. J. Landis Martin, president of NL Industries, said Tuesday that the proxy statement will also contain another proposal to limit anti-takeover defenses provided under Delaware state law.
Meanwhile, Lockheed issued its annual report Tuesday, disclosing that the company will reduce its work force over an unspecified period by 6,000 employees in its aeronautical systems and electronics sectors. The aeronautical systems business is headquartered in Burbank and includes facilities in Rye Canyon, Palmdale and Georgia. The company’s largest electronics operation is its Sanders Associates unit in Nashua, N.H.
In a letter to shareholders, Lockheed Chairman Daniel M. Tellep said the aeronautical systems revenues would decline this year to 20% of the corporation’s total, compared to 26% in 1989. The decline is equal to $594 million in sales on the basis of 1989 revenues.
Lockheed Vice Chairman Vincent N. Marofino also left open the possibility that the company would file a claim against the government for its losses on the P-7A Navy patrol aircraft program. When Lockheed disclosed a $300-million overrun on the program last year, officials said they did not plan to file a claim, but would accept full responsibility for the loss.
