Diceon Shareholders Block Calvary Bid for Control
Shareholders overwhelmingly rejected a San Diego holding company’s attempt to take control of the board of directors of Diceon Electronics Inc. at the company’s annual meeting Wednesday.
Sherwin Samuels, general counsel for Diceon, a manufacturer of sophisticated computer circuit boards, said a preliminary count indicates that more than 90% of shareholders who voted sided with the company in the proxy fight with Calvary Partners LP. Proxies for about 87% of Diceon’s 5.1 million shares were voted, he said.
The shareholders rejected three proposals submitted by Calvary, including its $5.25-per-share buyout offer. They also rejected proposals to change the company’s by-laws to allow Calvary to nominate a slate of candidates for all four board positions and denied an effort to give Calvary one board seat.
“The overwhelming vote speaks for itself,” said Ken Kannappan, a vice president of Kidder Peabody & Co. and Diceon’s financial adviser. “It shows what the shareholders believe is in their best interest.”
James R. Arabia, a stockbroker and president of Calvary, said he was disappointed in the results but would continue his efforts to acquire the company.
Citing Diceon’s recent losses and management’s inability to turn around the company, Arabia announced in December that Calvary would offer $27.2 million for all outstanding shares of Diceon.
Diceon Chairman Roland G. Matthews said the company’s financial turnaround is under way. Since November, he said, the company has spent more than $500,000 defending itself against Calvary’s suit. Arabia did not disclose how much Calvary spent on the effort.
Arabia said Calvary would extend the date on its offer and would continue to pursue a shareholder lawsuit against Diceon. Calvary filed suit in U.S. District Court in Boston against Diceon last month, accusing Diceon officers of failing to disclose their control of stock owned by Burton G. Chandler in Worcester, Mass.
Chandler owns 13% of the company stock. Arabia alleged that Chandler is an old friend of Samuels and has been paid $10,000 by the company’s law firm. He said the stock is controlled by Matthews and Peter S. Jonas, vice chairman of Diceon.
Jonas said that the company does not deny that management controls the stock but that it has complied with the Securities and Exchange Commission’s disclosure regulations, including requirements that it disclose the information in the proxy statement. Samuels noted that a federal judge rejected Calvary’s attempt to declare Chandler ineligible to vote at the annual meeting.
Diceon officials noted that Calvary has not succeeded in arranging any other acquisitions and did not have any financing arranged for this merger, and that Arabia, as a stockbroker and former bartender, had no experience trying to run a printed circuit board company.
Arabia acknowledged difficulty in getting a lender to take part in the battle, but said Calvary was holding discussions with several lenders. He said Calvary would bring in management capable of running the company if he can gain control.
