American Financial, the insurance-based conglomerate run by Cincinnati financier Carl H. Lindner, said Tuesday that it has acquired the equivalent of nearly 19% of Columbia Savings & Loan's common stock for $50 million.
American Financial said it has made two purchases of $25 million each of Columbia subordinated debentures that are due to mature in 2011. The debentures are convertible into 2.64 million shares, or 18.6%, of Columbia common stock, American Financial said in a report filed with the Securities and Exchange Commission.
At the same time, American Financial disclosed that it has sold 471,600 shares of Columbia common and preferred stock for $6.7 million.
A spokeswoman for American Financial declined to elaborate on the SEC filing but suggested that Lindner does not seek a controlling interest in Columbia. She characterized the debenture purchase as a friendly one "done in the normal course of business."
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Lee Eckel, Columbia's general counsel, said the S&L is in no danger of being taken over because a majority of its securities is owned by the Spiegel family and other friendly stockholders.
Columbia Savings is a profitable and fast-growing large S&L based in Beverly Hills that has earned a singular reputation by investing heavily in "junk bonds," which are corporate securities that have either low or no ratings.
Lindner is a nationally known businessman with a reputation for acquiring ailing firms and nursing them back to health.
American Financial said it bought the debentures through FMI Financial, an affiliated firm of which it owns a majority. However, American Financial apparently miscalculated the convertibility ratio of the common stock.
The spokeswoman said the 18.6%-ownership figure was based its belief that Columbia has 11.6 million outstanding shares of common stock. However, Eckel said, Columbia actually had 13.1 million shares of common stock in circulation as of the end of July. That would make American Financial's stake in Columbia 16.7%.