Hammond Co. Aims to Go Private With Tender Offer

The Hammond Co., reporting losses for the first nine months of its fiscal 1992, issued a self-tender offer Friday aimed at buying 30% of its remaining publicly held stock for $4 a share and becoming a privately held company.

The regional mortgage banking firm, which bought back 38% of its stock in 1990, wants to cut its number of shareholders to fewer than 300.

The tender for up to 380,000 shares would allow the company to remove its stock from public trading and stop filing public reports with the Securities and Exchange Commission.

The company announced its plans for the tender offer several weeks ago.

“Our stock is very thinly traded, which is one of the reasons our stock price is chronically depressed,” said Thomas T. Hammond, the Newport Beach company’s president.

“Also, we are essentially a privately held company already, after our last stock offering. So it’s only fair and reasonable to offer a way out to our minority shareholders.”

The self-tender offer would allow small investors in the firm to get out with a premium above current prices. The company’s stock had been priced at about $2.50 a share earlier this week, Hammond said.

The company will pay up to $1.52 million to acquire up to 380,000 shares. The company has about $4.5 million in cash, or about $3.50 a share, but is financing the offer through a private placement of convertible preferred stock.

Hammond, who owns 44% of the company, is one of the individuals in the private placement group lending the money.

Shareholders who helped form the company in 1975 paid 25 cents a share and will end up with profits of $3.75 a share if they sell out now. But those who bought stock at $13 a share in the company’s initial public offering in 1983 would wind up with a loss of $9 a share.

Hammond stressed that any tenders are optional and that the offer is contingent upon being able to finance the transaction and reduce the number of shareholders to at most 299.

Hammond would see his own stake jump to 62.2% if the deal is completed. All officers and directors as a group would increase their stake from 56.2% to 78%, not including preferred shares.

For the first nine months, the company lost $977,452, or 77 cents a share, compared with a loss of $778,879, or 61 cents a share, for the same period a year earlier. Nine-month revenue fell 13%, to $10.3 million from $11.8 million last year.