Another Fabulous Fracas?
Last week's settlement of the two-year legal Ping Pong match for control of Fabulous Inns of America may not have been all peaches and cream.
Chula Vista investor Frank Ferreira, who supported the current management in its lawsuit alleging self-dealing by the company's ousted executives, was not a participant in the settlement.
The agreement, Ferreira said Monday, allowed the ousted group to "get off too easy." He said he also felt the same about Superior Court Judge G. Dennis Adams, who will not have to retry the dispute. Many of Adams' rulings in the case were overturned earlier this month by the 4th District Court of Appeal.
"I'm considering appealing the decision," said Ferreira, who is now Fabulous Inns' largest shareholder with about 25% of the stock. "The judge can't force me into a settlement."
The ousted group agreed to sell its stock--48% of the total outstanding--back to the company for $15,000, or only about 1.6 cents per share. (The stock closed trading Monday at 4.) In addition, the company will pay about $185,000 in legal fees for the ousted group.
The other terms of the settlement are sealed, under orders from Adams.
However, Ferreira said that the ousted group admitted in the agreement to "several million dollars in damages." The exact amount remains under seal.
Fabulous Inns Chairman Jeffrey Krinsk, the former dissident shareholder whose charges of impropriety sparked the ouster of previous management, said Monday that his attorneys believed Ferreira's "agreement to any settlement was unnecessary, and Judge Adams shared that belief."
Ferreira also said he wants two seats on the company's board, and claims he has enough support to secure three seats. He owns about 250,000 shares of stock, or 25% of the now-outstanding shares, and said he has the support from holders of an additional 150,000 or so shares.
Meanwhile, the company faces another battle--who will pay the legal costs, estimated to be about $1 million on each side. International Insurance in Chicago already has refused to pick up the company's legal tab and Krinsk said he will fight the issue in court.
Skeptical of Investors
Ed Wedbush says he understands why people are skeptical of his firm's interest in acquiring more stock in Great American First Savings Bank. To a point.
What he doesn't understand is why people don't believe that he and his Los Angeles-based brokerage firm are only investors, not takeover threats. Wedbush Corp. acts as a clearinghouse for Great American's investment services.
Two weeks ago, Wedbush Corp. received state approval to up its current 9.8% equity stake in Great American to as much as 24.9%. The company must still secure Federal Home Loan Bank Board permission if it wants to buy more Great American stock. That approval process is now in the mill in Washington.
"We understand some people's skepticism," Wedbush said last week. "There are various (corporate raiders) who are doing this. But Wedbush Corp. has never been involved with that kind of thing and we've had substantial investments in other financial institutions."
In January, Great American filed a letter of opposition to Wedbush's attempt to add to its holdings because it violated the company's anti-takeover bylaws. But a key bylaw proviso--prohibiting anyone from buying more than 10% of Great American stock--expired Monday.
As for the long process of gaining regulatory approval, Wedbush seemed perturbed. "As far as I'm concerned, the approval is overdue," he said.
The Selling of Tax Reform Advice
Accounting firms are keeping U.S. Postal Service workers busy delivering their latest opinions and treatises on what the proposed Tax Reform Act of 1986 might mean--for everyone from General Motors to small businesses to Uncle Charlie.
But, if the truth be known, accountants are nearly as much in the dark as taxpayers about exactly how the new law will affect business and individuals.
"We're reading the articles in the newspapers," acknowledged local CPA Mike Schwarz, a member of the American Institute of CPA's Council and immediate past president of the local chapter of the California CPA Society. "The best we can do is wait until we get copies of the new law."
Once they do, and once they digest it all, you can bet your Form 1040 that they'll let the world know. In fact, Schwarz said, you can expect an avalanche of seminars on the new law--from both official accounting societies and "a number of private providers who will hit the market shortly after the bill is signed."
So add another item to the death-and-taxes axiom: The seminars will all cost money.
Imperial Aims to Lower Debt
Taking a cue from homeowners eager to cut their mortgage loan rates, Imperial Corp. of America, parent of Imperial Savings, has gone to the market three times in the last month, offering a total of $942 million in notes and mortgage-backed bonds to reduce its short-term debt and trim the number of its costly brokered deposits.
Imperial's management is trying to achieve "more of a balance" between the number of rate-sensitive liabilities and the number of rate-sensitive assets, according to Gary Palmer, senior vice president of corporate finance. Currently, liabilities falling in that category far outweigh assets, Palmer said.
Of the proceeds, Imperial will use $100 million to pay off short-term debt and $892 million to pay off brokered deposits, which, as of June 30, totaled $1.4 billion, Palmer said.