Investors Make Run at Todd Shipyards : Election: L.A.-based shareholders group nominates former chief of naval operations to board of once-lucrative company that foundered in the wake of naval buildup.
A Los Angeles-led investment group that includes a former chief of naval operations has launched a proxy battle for control of Todd Shipyards Co., the ailing Seattle ship builder that closed its San Pedro facility two years ago after a sharp drop in defense work.
In a filing with the Securities and Exchange Commission on Friday, investors Burton Borman and Hugh J. Maguire said their group had accumulated nearly 8% of Todd’s shares and will run five candidates against Todd’s proposed board.
To help in campaign, the Los Angeles group has enlisted a hallowed name in seafaring circles, Adm. Elmo R. Zumwalt Jr. of Arlington, Va., chief of naval operations from 1970 to 1974. He is one of the dissidents’ board nominees.
News of the proxy fight surprised an analyst who follows the industry. “I frankly have my doubts whether the company is a viable entity,” said the analyst, who asked for anonymity. “Maybe these guys (Borman and Maguire) know something I don’t.”
In a letter last month notifying Todd Chairman David W. Wallace of the impending proxy fight, Burton and Maguire said their group was “concerned about the value of our investments” under current management.
The company responded to news of the challenge by canceling a special shareholders meeting Aug. 15 at which directors were to have been elected. The Burton-Maguire group filed suit in Delaware, where Todd is incorporated, to have the election held on the originally scheduled date instead of the next regular shareholders meeting on Dec. 2.
Todd said in a statement Friday that none of its current directors except for Chief Executive Hans K. Schaefer will seek reelection to the board. It said it will field a full slate of candidates, however.
Skip Herman, an attorney for Burton and Maguire, said the group would have no comment until the SEC approves its filing early next week. A Todd spokesman said none of its executives was available for comment.
Todd boomed during the Reagan Administration’s Navy buildup of the early 1980s, turning out frigates and refurbishing destroyers and other military ships. Its earnings peaked at $31.7 million on sales of $716 million in 1982.
But with 85% of its work military-related, Todd began drowning in red ink once the Navy buildup was over. It lost $58.3 million in 1987, the year it filed for Chapter 11 bankruptcy protection.
It closed its 6,000-employee San Pedro facility in July of 1989, when annual losses peaked at $84.8 million. It shut down its Galveston, Tex., yard in August of the next year.
The only company shipyard still operating--in Seattle--has recently been refurbishing Coast Guard cutters, the company said. Employment is down from 13,000 in the early 1980s to 1,200.
Todd emerged from bankruptcy protection in late 1990. Its latest earnings report--for the quarter ended December, 1990--showed $5.2 million in profit on revenue of $37.85 million.
