Freedom News Holders Adopt Takeover Defense
Majority owners of Freedom Newspapers Inc., worried that dissident shareholder Harry H. Hoiles might align himself with takeover specialist Robert M. Bass, have created a voting block to thwart unwanted suitors for their family operation.
The majority shareholders, representing two branches of founder R. C. Hoiles’ family and two-thirds of the company, hired New York merger lawyer Martin Lipton to draft an agreement that essentially requires them to vote their shares together and to sell their stock only to each other.
The actions are meant to “signal to anybody who is thinking of making a raid on the company that we’re determined to remain a privately held, closely held, family company,” said Robert C. Hardie, chairman of Irvine-based Freedom Newspapers, owner of the Orange County Register and 26 other daily newspapers.
The actions would also tend to reduce the value of the Harry Hoiles family stock to any outsider.
Hoiles has battled the families of his sister, Mary Jane Hardie (Robert Hardie’s wife), and his late brother, Clarence H. Hoiles, for more than a decade in his effort to split up the company and take his share of the assets. The three families each hold about one-third of the shares of Freedom, which also owns 25 weekly newspapers and five television stations.
The majority contends that Hoiles is entitled only to the value of his stock, not the assets. Hoiles lost lower and appellate court cases to break up the assets but plans to ask the state Supreme Court to reverse the rulings.
Hoiles has threatened a number of times to sell his stock to an outside party, an act the majority would abhor.
At several Freedom meetings this year, Hoiles was accompanied by Glen Johnson, a Ft. Worth lawyer whose firm handles much of the Robert M. Bass Group’s legal matters. Hoiles’ son, Tim, said he had retained the lawyer while acting as publisher of Freedom’s Pampa, Tex., paper in the mid-1970s.
Though Hoiles said he has not talked with any Bass people about selling his stock to the Ft. Worth investor, the Hardie and Clarence Hoiles branches don’t believe it.
“We know who the lawyer is. We know the firm and who it represents,” Robert Hardie said.
And the majority also knows that the Bass Group--whose investments include American Savings Bank, a Stockton thrift operated out of Irvine--currently holds 40% of Times Publishing, which owns the St. Petersburg (Fla.) Times.
It bought the stake from two granddaughters of founder Paul Poynter and is challenging a dividend structure that it believes was a result of an acrimonious family feud among Poynter descendants. While Bass says his stake is simply a long-term investment, newspaper executives there contend that Bass has a hidden agenda to take control of the company.
Freedom’s majority owners decided to try to prevent a similar occurrence in Orange County. Hardie said the majority needed to hire a top Wall Street lawyer such as Lipton because they feared they would be up against the might of the Bass Group.
Under the new voting block agreement, the shareholders in the two families agreed to sell their stock only to each other and to allow a seven-member committee to vote the shares through the end of 1994, with annual renewals thereafter.
The agreement supersedes a previous pact between the two families that required current shareholders to offer stock to each other before selling to an outsider.