BAL HARBOUR, Fla. — The chairman of Storer Communications predicted Tuesday that shareholders would end up reelecting a majority of the current board of directors and keep control of the embattled company out of the hands of dissident stockholders.
But Augustus K. Oliver, general partner for New York-based Coniston Partners, which wants Storer sold and liquidated, said, "There's no question we'll get significant representation."
Stockholders at Storer's annual meeting here cast their votes and proxies for election of the nine-member board that will determine the fate of the nation's fifth-largest cable-television company, which has been steadily losing money during the last three years.
After a one-hour session, the meeting was adjourned until May 17 when the proxy outcome will be announced. C. T. Corp. of Wilmington, Del., has been hired to count the votes.
During Tuesday's meeting, Storer's current board of directors was nominated for reelection and Coniston also offered a slate of nine.
Results Due Later
"We won't know the final results of the election for a week or more," said Peter Storer, chairman and chief executive of the Miami-based company. "Based on a review of proxies delivered to the company, however, I am confident that a majority of our incumbent directors have been reelected."
Earlier, Storer told stockholders that the communications company would prosper under a proposed $1.64-billion leveraged buy-out agreement with the New York investment firm Kohlberg, Kravis, Roberts & Co.
"We think that, based on our current business plan . . . (the company) shall grow substantially in the next four years," Storer said. "Based on market valuation, selling value will double what it is now."
He added that the "majority capital expenditures have been dropping in the past few years. We have completed the construction of our cable system."
Paul E. Tierney Jr., another general partner of Coniston, said that the Kohlberg, Kravis proposal represented "a step in the right direction" but that other potential bids weren't adequately reviewed by management.
"There may well be much higher value and certain value for shareholders by entertaining other bidders," he said. "It is our contention that there are many bidders that have not been properly aired."
Oliver, who was among the nominees to the board, said that if he and other supporters were elected to the board, they would look for other potential bidders. But if they determine that the Kohlberg, Kravis deal is the best, "We'll try to close the deal."
Storer said that the communications company had spoken with 19 companies but concluded that the Kohlberg, Kravis deal, which he estimated was worth $87.50 per share, was the best.
The proposal calls for Storer, which owns seven television stations and 600 cable franchises in 18 states, to merge with KKR Holding, a corporation recently formed by Kohlberg, Kravis. Storer's management would run the firm.
If for some reason the deal was canceled, Kohlberg, Kravis would get $21 million from Storer. Kohlberg, Kravis said the agreement automatically would be terminated if fewer than five incumbent directors were reelected.
Terms of Agreement
Under terms of the definitive agreement, each Storer common share would be converted into $75 cash, $25 face value of preference stock and warrants to purchase common stock in the new company.
Coniston, however, maintains that Storer has a liquidation value of between $90 and $100 a share.
In a leveraged buy-out, a group of investors--usually top management--acquires a company in a deal financed mostly through borrowing against the future cash flow or asset value of the company.
Peter Storer said that he was optimistic that the deal would be completed before the end of the year. However, representatives of Coniston questioned whether that was feasible, especially since the Federal Communications Commission and other agencies must approve the proposal.
Storer lost $5.8 million in the first quarter of this year, less than the $14.8 million it lost in the year-ago period. But its long-term debt remains at nearly $785 million because of an intensive cable-system construction program during the past five years.