Four days after he announced victory over Marje Everett in their battle to control Hollywood Park, R.D. Hubbard learned Friday that he had fallen less than 1% short of the stockholder support he needed.
After the Hollywood Park election inspectors examined the votes in Delaware, where the company is incorporated, it was announced that preliminary returns show that Hubbard has 49.38% of the shareholder consents. Hubbard, a Texas glassmaking executive who owns tracks in Kansas and New Mexico, needed more than 50% of the consents to take over Hollywood Park, where Everett has been a force since 1972.
During a news conference Monday and in a half-page ad that he ran in The Times on Wednesday, Hubbard said that more than 50% of Hollywood Park’s stock had been voted in his favor.
Earlier Friday, before the vote was reported, a federal judge criticized Hubbard for taking the newspaper ad.
“This was very improper,” Stephen V. Wilson said in United States District Court, Central District of California. “It was misleading and made it appear as though the election was a fait accompli. There is a possibility that it caused irreparable harm to Hollywood Park.”
Wilson issued a temporary restraining order prohibiting Hubbard from running other ads and issuing news releases until the stockholder votes are certified.
Wilson is also concerned about the effect Hubbard’s ad will have on shareholders in the proxy fight. Having fallen short Friday, Hubbard’s next plan is to gain enough proxies to dislodge Everett at Hollywood Park’s annual shareholders’ meeting, scheduled for Feb. 18.
“Remedial action might have to be taken regarding these proxies,” Wilson said. “That ad could have an effect on the way the shareholders cast their votes.”
Hubbard’s ad began with the announcement that he had gained more than 50% of the shares voted, and later it said: “Although the official counting of the consents and any revocations . . . will take several days, I (Hubbard) am confident that, when the dust settles, the stockholders will have spoken decisively in favor the new directors. . . .”
On Friday, Gibson, Dunn & Crutcher, Hollywood Park’s law firm, announced that 1,959,808 shares were voted for Hubbard, and 85,822 revocations of Hubbard votes had also been received. Hollywood Park’s shares total 3,968,844, which meant that Hubbard was 24,615 short of the 1,984,423 he needed for victory. About 51 1/2% of the track’s total shares were voted.
In order to win the upcoming proxy fight, either side is required to gain a majority of the shares voted, not a majority of the total shares in the company.
A spokesman for Hubbard confirmed Friday’s results. Hubbard will have until the end of the business day Tuesday to review the election, but there were no indications from his camp that the outcome will change.
Hubbard was traveling Friday and not available for comment, but through a spokesman he made these comments: “I’m very gratified by the support shown the stockholders in the consent solicitation. I am calling on the current board to work with me in bringing the proxy contest to a rapid conclusion, in order to avoid continued substantial expenditure of company money. If it is necessary, I am fully prepared to continue the proxy fight to the annual meeting, but I hope that is not necessary.”
A spokesman for Hubbard declined comment, but apparently Hubbard underestimated the number of consent revocations that would be voted. Last Monday, Hubbard said that he had received 51 1/2% of the consents.
“We are pleased with the result,” said Charlie Perkins, Everett’s spokesman in New York. “Now the shareholders will be able to hear the arguments from both sides at the annual meeting and then make a decision.”
Everett has been able to count on at least six board votes--her own, plus those of John Forsythe, Merv Griffin, Aaron Spelling, Allen Paulson and Stan Seiden. Everett’s opponents on the board have included Harry Ornest, Warren Williamson and John Newman. Tom Gamel, who has also sought Everett’s ouster, resigned from the board last week, suggesting that he had been ineffective because of the Everett majority. Another board member is Bruce McNall.
“Hubbard started with about 30% of the stock, so what he picked up after that was really not that substantial,” Perkins said.
Perkins was refering to Hubbard, Ornest, Gamel and Chris Bardis, who have a combined total of about 30% of the company stock.
Hubbard scored a victory of sorts earlier Friday when Judge Wilson rejected Hollywood Park’s motion for a preliminary injunction based on alleged violations of the Securities and Exchange Act by Hubbard, Gamel and Ornest. Wilson said he did not feel that the three major Hollywood Park stockholders had conspired to take control of the company. He also said that the record did not show that Hubbard intended to make Hollywood Park private or planned to eliminate live racing at the track.
“Ornest triggered the allegations by buying shares in the company from Marvin Davis,” Wilson said. “Ornest couldn’t hold all of those shares because of the company’s Real Estate Investment Trust arrangement and sold some of them to Hubbard.
“Ornest opposed a proxy fight, but Hubbard was amenable to one. Gamel was precluded from joining them because of an earlier agreement that he made in order to come on to the board.”
Wilson said that the purpose of the law was to stop people “from sneaking up on the incumbents,” and he could find no evidence of that.