With Apria, Argyros Has His Dukes Up Again

George Argyros is a man who can’t sit still. He often carries two briefcases when he boards his private jet. His 100-foot yacht, the Huntress, is equipped with satellite communications, telephones and fax machines.

Even on a pleasure cruise in the Mediterranean, “he’s always looking to soak up something other than sun--he soaks up information,” says James L. Doti, president of Chapman University in Orange.

The 61-year-old Argyros, who made a fortune in real estate and reinvested it in an array of companies, also has been soaking up a lot of controversy.

He is embroiled in two tough and public fights: control of the troubled Apria Healthcare Group Inc. and the development of an international airport at the El Toro Marine Corps Air Station.

In the last three years, Apria’s stock price has plummeted 76%--from $35.25 to about $8--whacking the value of Argyros’ stake by $73 million. At the same time, questions over his collegial approach to problem-solving at the board level have arisen in his recently announced quest to consider taking Apria private.

Whether Apria becomes Argyros’ greatest embarrassment in an otherwise stellar business career remains to be seen. He resigned as chairman April 29 to avoid the appearance of a conflict, though he remains on the board as he plans his next move.

For Argyros, the predicament is as stimulating as it is aggravating. Other setbacks, most notably his purchase of the Seattle Mariners baseball team and a 50% stake in Air California airlines, eventually became financial bonanzas that gave him a total net gain of about $40 million.

Apria isn’t Argyros’ only battle.

He also is the lightning rod for those opposed to converting El Toro Marine Corps Air Station into an international commercial airport.

The Newport Beach businessman poured nearly $2 million into two countywide initiatives in recent years that gave voter approval for an airport because he thinks the facility will be good for the county. South County residents, however, are still working to undo those plans.

Whatever else, admirers and detractors alike say it’s not a good idea to bet against Argyros.

“He can pull enough strings on almost any deal that requires political connections,” said Tom Rogers, who was chairman of the county Republican Party in the early 1970s, when Argyros burst on the national political scene as a local finance chairman for President Richard Nixon’s reelection bid.

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Argyros, a stocky, effervescent man with an alert and inquisitive mind, has strongly held beliefs. He often acts with passion and the certainty of purpose that come from building a successful business from nothing.

He is a take-charge person who bowls over those who hesitate. His blunt, aggressive, dominating nature infuriates those who disagree with him, particularly southern Orange County foes of the El Toro airport.

Those who work with him, though, admire such qualities as a sign of leadership.

Argyros was born in Detroit, the grandson of Greek immigrants. He was 10 when his parents moved the family to Pasadena. At 14, he went to work as a box boy at a grocery store, and he’s never stopped working.

An average student in high school and at Chapman College in Orange, he sometimes fell asleep in class because of his long work hours. He slept so soundly in one early-morning philosophy class that he never woke as fellow students carried him, desk and all, into the hallway outside the classroom.

Argyros did well in business classes, though, he said. He figured he would go into the food industry, and spent one semester at Michigan State University, which offered a specialty in that area.

But after graduating and marrying his college sweetheart, Judie Henderson, he decided to look for a job in which he could be his own boss. He obtained licenses to sell securities, insurance and real estate, but quickly ditched the first two for real estate because he believed it would give him the best opportunity to control his destiny.

He spent a brief time as a broker selling land to developers and helping to put together commercial deals for others, but he decided to become a developer himself to acquire what he once called “real serious money.” In 1963, he built his first major project--a strip shopping center in Tustin noteworthy only because it was the first Spanish-style Orange Julius.

Detecting a market for apartments, he soon began developing and acquiring complexes. Through personal holdings and his Arnel Development Co., Argyros has become one of the region’s largest landlords, with 5,200 units in 19 apartment buildings, most of them in Orange County.

His apartments alone are worth more than $500 million, industry experts say, and he has other valuable real estate in numerous business complexes, such as the Metro Pointe commercial, office and condominium project next to South Coast Plaza in Costa Mesa. Argyros would not provide details about those commercial real estate projects, which total more than 1 million square feet.

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He is known for the meticulous maintenance and efficient management of his buildings, ensuring the cash flow they produce.

“I have been focused always, from a business philosophy standpoint, on cash flow and building for the long term,” Argyros said.

That strategy “serves as the foundation of his wealth. He takes care of that,” said real estate consultant Kenneth Agid of the Marketing Department in Irvine. “Everything else flows from that.”

Argyros accumulated his fortune--estimated by Forbes magazine in 1991 at $265 million--in a quiet manner and independently from the developer community, Agid said. “He was very nose-to-the-grindstone,” the consultant said.

Ever the astute businessman, Argyros was careful not to put all his eggs in one basket. Besides, he said, “my intellectual interests were broader than real estate.”

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His purchase of the lackluster Seattle Mariners professional baseball team for $13.1 million in 1981 and his acquisition, with developer William Lyon, of AirCal a few months later for $61.5 million put him in the public spotlight for the first time.

Baseball free-agency and an air-traffic controllers strike had left the companies in a shambles. He and Lyon concentrated first on turning around AirCal. Meantime, the Mariners, saddled with a bad lease and rising salaries, cost Argyros $37 million in their first three years under his ownership.

He had to make tough cost-cutting decisions in Seattle, including trades of better, high-paid ball players. Some managers also didn’t appreciate his meddling in on-field matters. The result: Seattle came to revile the intruder from Southern California.

Sportswriters there still write about Argyros from time to time. One described a recent jerry-built pitching rotation as “a handful that would warm the cockles of George Argyros’ heart--cheap.”

Argyros said he remains unfazed by the experience. He figures he saved baseball for Seattle--and some there agree. The easier way out, he said, would have been to move the team elsewhere. As it is, no Mariners owner has turned a profit since 1989, when Argyros made $2 million in his last year at the helm.

He said he was determined to make both the team and the airline profitable, and he was rewarded for his work. The 1987 sale of AirCal to American Airlines for $225 million and the 1989 sale of the Mariners to Indianapolis businessman Jeff Smulyan for $76.1 million gave Argyros a combined gain of $40 million after all expenses and losses.

The decision to sell AirCal was easy. Argyros didn’t want to give up the Mariners, but the team had taken a toll on his marriage, leading to a brief split with Judie in 1985.

His resolve to turn both companies around is part of his make-up--what friends call his fierce competitiveness.

“George does everything intensely and competitively,” Agid said. “He plays golf with an abacus. He likes to have something on the line, whether big or small. He needs to be competing, and he takes the challenge of competition very seriously.”

Another friend sums up Argyros this way: “If George bought a stock at $5 a share and it went to $80 and then fell back to $60, he’d complain that he lost $20 a share.”

In 1987, Argyros and venture capitalist Charles Martin formed Westar Capital, mainly as an Argyros family investment vehicle. They set up Westar to buy major stakes in established but growing companies that had proven management.

Its first effort was to put what Argyros called “several million dollars” into a small home-health-care company called Homedco Group in Fountain Valley. Westar originally held 23% of the stock, but that was reduced as the company offered new stock to acquire other firms.

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In 1995, Homedco merged with Abbey Healthcare Group in Costa Mesa to form Apria, the nation’s largest home-health-care firm by revenue, in what was touted as a merger of equals. Argyros, who wasn’t a director but was represented on the board by Martin, said he wasn’t sure it would work.

It didn’t.

In the last two years, the company’s value has plummeted 75%. Apria has had difficulties trying to straighten out operational snafus and a convoluted organizational structure created in the merger.

The snafus included its failure to collect money it was owed because the Homedco and Abbey computer systems weren’t compatible.

Last year, Argyros replaced Martin on the board and, in January, became chairman. His stint on the board was a revelation, he said, and he berates himself for not paying enough attention to the merger as a shareholder.

“You can’t have a merger of equals or you have complete chaos, and that’s what they had,” he said.

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He knew the board was split between four Homedco directors and four Abbey directors. What he didn’t know, he said, was how deep the divisions went.

“They had two nominating committees. They changed the bylaws so that the Abbey guys would vote their own guys in and out, and the Homedco guys would vote their own guys in and out,” he said. “And they just didn’t get along.”

Worse, each side controlled the hiring of every other executive officer. “The chief executive was a Homedco guy, and an Abbey guy was the president, and you had a Homedco chief financial officer and you had an Abbey guy next, and you could not change any of them unless the other side would agree,” he said. “I’ve never seen a situation like that, ever, nor was I aware of it.”

Argyros is credited with creating a more collegial atmosphere on the board and persuading directors to abolish the structure in favor of a conventional one with an added board member from neither side.

But by the end of last month, Argyros had decided that pending offers to provide financial help or a buyer for Apria weren’t very good. He announced that he was thinking of putting a group together to take control and take the company private. Some directors grumbled that he was taking action only after the stock had dropped to a low point.

One of his allies on the board suggested April 29 that he step down as chairman, which he did.

“I’m a believer in the long term with Apria,” he said. “It wasn’t a healthy merger, and it didn’t work out well, and we’re a company primarily trying to clean that up. But I think the company has really turned the corner, so I’m pleased about it.”

Argyros also is a believer in educational and political endeavors. He has been chairman of Chapman University’s Board of Trustees for the last 22 years and has given it about $10 million over time.

And he has long contributed to political campaigns, jumping into the national scene early as the local co-finance chairman of Nixon’s 1972 reelection campaign. He has been the finance chairman for Gov. Pete Wilson and played major roles in other GOP state and national campaigns, including former Kansas Sen. Bob Dole’s 1996 bid for the presidency.

He currently is chairman of Team California, the party’s special fund-raising group that tries to tap into the state’s high rollers.

Some party leaders criticize Argyros, accusing him of getting involved only in causes and candidates that would lead to profits for him down the road.

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Others, though, point out that whatever his motives, he is a major force, especially outside Orange County, where he is active in political affairs.

But even in that arena, his style is vintage Argyros.

At a 1996 conference in Italy, for instance, he was worried about the meager role he could play in discussions with members of the German Bundestag, one of Germany’s legislative bodies, said Dimitri Simes, president of the Nixon Center think tank in Washington.

“The next thing we know,” Simes said, “he not only opens the meeting but delivers a speech and takes charge of the meeting.”