ICN’s Beleaguered Panic Says He May Step Down
Controversial ICN Pharmaceuticals Inc. Chairman Milan Panic said he could step down as chief executive as early as the company’s annual shareholder meeting in mid-December, a development Wall Street would likely greet with enthusiasm.
Panic, 70, who has repeatedly dismissed suggestions that he relinquish his 41-year control of the Costa Mesa drug manufacturer, said business is on the upswing, the stock is near its 52-week high and he is weary of working long hours.
Just seven weeks ago he was talking about remaining on the job for another year or two. But in an interview Tuesday, he said “the time is coming for me to lower my load and transfer some of my responsibilities to somebody else.”
His comments came just days after a whirlwind trip to Yugoslavia, where he moved to reclaim a Belgrade pharmaceutical plant that was seized by the state early last year. He basked in the cheers of 1,000 workers.
Others note that Panic is facing intense pressures from dissident shareholder groups that are threatening to nominate their own slates of directors. Panic is one of the directors up for reelection at the Dec. 18 meeting.
It was unclear Wednesday whether Panic would allay dissidents’ concerns if he surrenders his CEO position. Leaders of the dissident investor groups would not comment.
Panic himself left the door open to remaining longer as CEO, saying only that he is considering stepping down within six months, possibly as early as the annual meeting.
He also said he plans to remain chairman to mentor his probable successor, longtime protege Adam Jerney, ICN’s president and chief operating officer. Jerney handled the company’s chief executive duties in 1992 and 1993 when Panic took a leave to serve as Yugoslavia’s prime minister. Jerney could not be reached for comment.
Dissident shareholders for years have been pushing for Panic to give up control, making unsuccessful attempts in previous annual meetings to impose a mandatory retirement age that would have forced him out.
One group, Special Situations Partners Inc, last December called for ICN to split off its Eastern European operations into a separate publicly traded company to boost shareholder value.
Eventually, Panic proposed a corporate restructuring that would consist of ICN and two spinoff companies 80% controlled by ICN. Some investors balked when Panic indicated he would be chairman of the two spinoffs as well as remain head of ICN.
Panic later said he would not serve as chairman of one of the spinoffs and was “unlikely” to become chairman of the other.
He said he has had discussions with dissident shareholders but does not plan any changes in the proposed corporate restructuring. He also said Tuesday that he is confident about surviving any proxy battle.
Michael Tong, an analyst at First Union Securities in New York City, said it was unlikely Panic would quietly fade away, regardless of his title. “It’s his baby,” he said.
Even so, analysts said Panic’s departure as chief executive could boost ICN’s stock.
Larry D. Smith, an analyst at Sutro & Co. in New York City, said ICN stock has failed to reach its potential partly because some investors view Panic himself as a liability.
The stock, which hit a 52-week high of $38 during trading Tuesday, closed Wednesday at $36.81, down 50 cents a share, on the New York Stock Exchange. ICN shares have gained more than 45% since the beginning of the year.
The ICN leader has been plagued by a series of legal difficulties over the years. The Securities and Exchange Commission is seeking to oust Panic from his ICN executive positions and bar him from running a public company. The government has accused Panic and ICN of fraudulently misleading investors in 1994 about the company’s progress in winning approval for a new hepatitis drug. Panic and ICN are also targets of a criminal investigation by the U.S. attorney’s office.
Panic has denied any wrongdoing.
In the interview Tuesday, Panic said ICN is making significant inroads in its attempt to regain control of a drug manufacturing plant in Belgrade seized nearly two years ago by his political nemesis, Slobodan Milosevic. ICN managers and thousands of workers returned to the plant last week and are in the process of reorganizing it.
Panic said he expected Yugoslav courts to return the plant to ICN within the next two months. He said the factory could generate sales of up to $100 million next year and $1 billion within a decade.
“This is a huge factory with great potential,” Panic said, adding that the facility was in surprisingly good shape after nearly two years in the state’s hands.
The company’s stock gains can be traced partly to strong sales of ICN’s Ribavirin drug, which is used by Schering-Plough Corp. in combination with interferon to treat the liver disease hepatitis C.
