Warner Communications, under pressure from the New York Stock Exchange for its failure to hold a shareholders meeting in 20 months, has set April 2 as the date for an annual meeting. The action could trigger a battle for control if Warner's largest shareholder, Chris-Craft Industries, carries out a threat to seek more seats on the Warner board.
Geoffrey W. Holmes, a Warner vice president, confirmed late Tuesday that Warner took the action after some urging from exchange officials. Warner must hold a second, separate meeting to satisfy requirements for a 1986 meeting, Holmes said, but he added that he had "no idea" whether the second meeting will be scheduled in May, when Warner shareholders usually convene.
With two shareholders meetings, Chris-Craft will have two opportunities to stage a proxy fight for greater influence in the entertainment company's affairs. Chris-Craft controls just three of 14 seats on the Warner board despite its 29.5% stake in Warner's voting shares. The company said last summer that it failed to gain more seats through discussions with Warner management and board committees, and it notified the Securities and Exchange Commission that it might align with other large shareholders to seek certain changes at Warner.
Warner's bylaws impose no ceiling on the board's size, according to Holmes.
In documents filed three weeks ago at the SEC, Chris-Craft reiterated its 7-month-old threat to seek changes in those bylaws "or in the size or composition" of the Warner board. In its most recent filing, Chris-Craft disclosed that it has proposed that Warner buy an unspecified amount of stock on the open market or make "other purchases of (Warner) common stock on a basis fair and equitable to all stockholders."
If Warner repurchases stock on the open market, Chris-Craft's ownership percentage will increase as a result. But Chris-Craft also left the door open for a sale of its holdings.
"We are always looking at stuff like (a stock repurchase), but I don't know if that's scheduled to be taken up," Holmes said, declining to disclose the date of thee next board meeting.
Chris-Craft was welcomed as a friendly investor two years ago when Warner was fighting a takeover threat from Australian publisher Rupert Murdoch. Within months, however, the relationship frayed as the Warner and Chris-Craft chairmen clashed. Shareholder meetings were twice postponed last year because Warner was "unable to come to an agreement as to the slate of the board of directors," Holmes said at the time.
Under the laws of Delaware, where Warner is incorporated, notice of a shareholders meeting must be sent no fewer than 10 days nor more than 60 days before the meeting.