Titan’s U.S. Work Not Part of Probe, CEO Says
Titan Corp. Chief Executive Gene Ray said a criminal investigation into allegations that the company’s consultants bribed foreign officials did not concern any U.S. government contracts, according to a regulatory filing Thursday.
The company’s work for the U.S. accounts for about 98% of its business, Ray said in a letter to employees dated Wednesday that was filed with the Securities and Exchange Commission. Titan, based in San Diego, makes military communications equipment.
Lockheed Martin Corp., which had agreed last year to buy Titan, discovered the suspicious payments in February while reviewing Titan’s books. Lockheed alerted the SEC and the Justice Department and has delayed completion of the purchase twice in the last two months. On Wednesday, it cut the price it would pay for Titan by 9% to $1.66 billion as a result of the probes.
“We are all very proud of Titan’s past performance and commitment to upholding the highest ethical standards,” Ray told Titan employees in the note. “Each of our directors and each member of executive management is personally committed to resolving these issues quickly.”
Titan said in a March 31 filing that the government’s investigation was “focused primarily” on payments made by Titan consultants in Asia, Saudi Arabia and the African nation of Benin. In that filing, it did not specifically say there was no probe of its U.S. business.
If the government determines that unlawful payments were made, Titan or its workers could get criminal and civil penalties and limitations on Titan’s ability to export products.
Titan’s shareholder vote on the sale to Lockheed has been delayed until June 7 from April 12. The date to complete the transaction has been pushed back as far as Sept. 24.
Lockheed’s new offer is still 18% above the $16.96 price of Titan shares before the original offer, made in September. Titan shares have more than doubled in the last year, while Lockheed, maker of F-16 fighter jets and C-130J cargo planes, has climbed 4.9%.
On Thursday, Titan shares fell 5 cents to $19.55 on the New York Stock Exchange. Bethesda, Md.-based Lockheed fell 22 cents to $47.54.
