A Hong Kong company with a range of investment interests has paid more than $4 million in the last five weeks for a 5.7% stake in ailing Smith International, the Newport Beach oil services and equipment company now operating under a Chapter 11 bankruptcy reorganization.
Industrial Equity (Pacific) Ltd. bought nearly 1.3 million shares of Smith common stock at prices ranging from $2.55 to $3.60 a share for itself and five affiliated companies, according to a document filed with the Securities and Exchange Commission. Industrial Equity said it purchased the shares for investment purposes.
"I like to see that kind of trading," Robert Gubrud, Smith International's vice president and treasurer, said of the unusually high volume of activity in Smith's stock in recent weeks.
Despite the Industrial Equity purchases, however, Smith closed Tuesday on the New York Stock Exchange down 12.5 cents at $3.25 a share.
Gubrud said he knew nothing about Industrial Equity except what the SEC document contained. No one from the investment company has contacted Smith International executives, he said, though he expects a "courtesy call" soon.
The SEC requires any investor who buys 5% or more of a publicly held corporation to file a statement of its identity and to reveal its stake in the company and its intentions.
Industrial Equity's statement, filed Monday, says the company acquired the Smith shares "for investment purposes" because stock in the company appears to be an "attractive" opportunity now.
Industrial Equity said in its filing that it may acquire more Smith shares in the future but that it had "no present plans or proposals" to acquire the company, force a merger, change directors or make any other material changes.
The stock purchase makes the Hong Kong company the second-largest shareholder. The largest is Robert E. Torray & Co., a Bethesda, Md., investment company that owned 18.7% of Smith International as of February. Robert E. Torray, president of the company that bears his name, said Tuesday that he has no intention of selling his Smith stock "under any conditions."
Industrial Equity is operated by money managers in Australia, New Zealand and the United Kingdom. Most of its stock is owned directly or through two other companies by Brierley Investments Ltd. in Wellington, New Zealand.
Industrial Equity uses its wholly owned subsidiary, Auckland Pension Funds Ltd., for its securities investments in U.S. corporations. Brierley, Auckland Pension and two other companies joined Industrial Equity in filing the SEC document.