US Facilities Chairman to Leave Company : Insurance: George Kadonada, who has fought a hostile takeover, will exit once a severance package is readied. Fidelity National Financial is hopeful the Costa Mesa firm won’t resist its bid.
US Facilities Corp. said Wednesday that its chairman, who for 10 months has led the fight against a $79-million hostile takeover bid, will leave the Costa Mesa insurance carrier once a severance package can be put together.
George Kadonada will continue to run the company as chairman and chief executive until the severance deal for his “voluntary departure” can be worked out, probably within a month, the company said in a prepared statement. The company also released its annual earnings, which showed record revenue but a lower profit.
Meantime, executives at Fidelity National Financial Inc. in Irvine, which won a shareholder vote last year to put US Facilities up for sale, said Wednesday that they still want to buy the company.
Chairman William P. Foley II and President Frank P. Willey said they will put a new proposal, as well as a slate of director candidates, before shareholders at the May 24 annual meeting of US Facilities.
Whether US Facilities will continue to resist a takeover is uncertain. Neither Kadonada nor other executives were available for comment. But Fidelity’s managers are hopeful.
“Maybe at this point we can sit down and talk to people who are more responsive,” Foley said.
The two companies have not had discussions in at least four months because of a stalemate over the wording of a confidentiality agreement that US Facilities wants Fidelity to sign before reviewing its financial books. Willey said US Facilities did send a letter recently asking Fidelity to review the oft-altered document.
Though Fidelity still could offer $15 a share for the company, Willey said, it would first have to re-evaluate US Facilities to see if that price is still justified.
“It’s not like our offer is always going to be on the table, ready to be taken at any given time,” he said. “But as of now, we still have a strong interest in pursuing this acquisition.”
In May, Fidelity won an overwhelming shareholder victory for its proposal to put US Facilities up for sale to the highest bidder, and it appeared to win two seats on the company’s board. But a court later ruled that the votes for directors were counted incorrectly and gave those seats back to US Facilities’ nominees.
Cecilia A. Wilkinson, a US Facilities spokeswoman, would not disclose the reason why Kadonada, 52, is leaving the company. She did say, however, that his decision to leave was not related to his battle to thwart Fidelity’s attempted takeover.
Fidelity, the nation’s fifth-largest title insurance company, wants to acquire the medical stop-loss insurance carrier in an effort to diversify its holdings and rely less on the volatile real estate market. Foley has said that within a few years he wants half of Fidelity’s earnings to come from non-title insurance companies, like US Facilities.
The earnings report issued Wednesday by US Facilities said its profit last year was $6.2 million, a 9% drop from $6.8 million for the previous 12 months. Annual revenue rose 10% to a record $122.8 million from $112 million for 1993.
For the fourth quarter, the company reported earnings of $2.8 million, an increase of 87% over income of $1.5 million for the final three months of 1993. Quarterly revenue grew 3% to a record $30.7 million from $29.8 million for the same period a year earlier.
US Facilities released its earnings report and its news about Kadonada after the markets closed. The company’s stock ended the day at $11.69 a share, down 31 cents, in Nasdaq trading.
The stock has fallen from a high of $14.38 a share in May, during the heat of the takeover battle.
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US Facilities’ Earnings Slip
US Facilities Corp. reported a 10% increase in 1994 revenue, to $122.8 million, but profit was down 8% to $6.2 million. The insurance company cited losses from the Northridge earthquake and unusual charges to fight a takeover attempt. Amounts in thousands except for data per share:
4th qtr 4th qtr 12 months 12 months 1993 1994 1993 1994 Revenue $29,796 $30,652 $111,979 $122,811 Net income 1,542 2,770 6,767 6,238 Per share 0.26 0.46 1.14 1.04
Source: US Facilities; Researched by JANICE L. JONES / Los Angeles Times
