Advertisement
YOU ARE HERE: LAT HomeCollections

Irvine Co. Case : Bren's Leadership Made Her Fearful, Clark Tells Court

January 26, 1988|MICHAEL FLAGG | Times Staff Writer

LOS ANGELES — The matriarch of the Irvine family, which once owned a broad swatch of Orange County, testified Monday that she decided to sell her interest in the Irvine Co. in 1983 because she feared that Chairman Donald L. Bren might run the company into the ground.

Now Athalie Clark is contesting the price Bren offered for her Irvine Co. shares in a Michigan state court, which held a special one-day session in Los Angeles for the elderly Newport Beach resident.

"I like Mr. Bren very much as a social friend," Clark testified. "But I have very, very inclusive reservations about his corporate management."

Bren had estimated the value of the Irvine Co. at $1 billion when he bought most of its stock in 1983 and offered Clark and her daughter, Joan Irvine Smith, $110 million for their 11% of the company. Smith owns 5.5% of the stock outright and put another 5.5% in a trust from which her mother draws the interest.

Clark and Smith contend that Bren seriously undervalued the company in order to buy it cheap. They say that the Irvine Co. was worth $3 billion when he bought it and that their stock was actually worth $330 million. With interest, that now comes to $500 million, they say.

The trial--held in Michigan because the Irvine Co. is incorporated there--is supposed to determine the market value of the company at the time Bren bought it.

The high-stakes trial--with Clark and Smith just beginning to present their side of the case--is expected to continue through spring as legal expenses mount into the millions of dollars.

Clark testified Monday that she wanted to keep her ownership in the landowning and development company, which was started by her father-in-law in 1894 but that she became convinced that the company was unlikely to prosper under Bren.

"I have known Mr. Bren for many years during past business transactions. . . . I would certainly question his best judgment, in my opinion," she testified.

She also believed, she testified, that Bren was loading the company with a crushing $500-million burden in bank loans he was using to buy out other stockholders. So she decided to sell her stock, she said.

"I'd been associated with the Irvine Co. for 60-odd years," said Clark. "It was very hard to give that up."

But "I was very uneasy about . . . $500 million going out of the company," she said.

She also objected to the "change in style" Bren wrought in the family company, she said, which had been distinctly Orange County conservative.

Development Doing Well

"Maybe I'm old-fashioned," said Clark, 84. But the new buildings the Irvine Co. constructed under Bren "might be better related to Beverly Hills," she said.

When an Irvine Co. lawyer pointed out that the company's developments seem to be doing well, including the big Newport Center office and retail development and the huge Irvine Spectrum office and industrial park, Clark replied: "Orange County is growing with such speed . . . that probably it wouldn't have mattered much" who was chairman of the company in the last few years.

Clark also accused Bren, who owns a home building company called the Bren Co., of steering Irvine Co. business to his own company.

After Bren bought part of the Irvine Co. in 1977 with other investors, Clark said, "many pieces of land were being developed by the Bren Co., not the Irvine Co., and that seemed like a great conflict of interest to me."

Howard I. Friedman, Clark's attorney, Monday painted her as a shrewd business person who has owned real estate, operated ranches, served on public and private boards and been prominent in conservative Republican circles.

But Irvine Co. attorney Bill Campbell presented another picture: Testimony shows that Clark went against the advice of her own attorney in rejecting Bren's offer, Campbell said.

Clark also testified Monday that she didn't know or didn't recollect many of the details of the events leading up to Bren's purchase of the company in 1983.

The company has long argued that evidence shows other sophisticated investors in the company--including the late Henry Ford II and Detroit shopping center magnate A. Alfred Taubman--were satisfied with Bren's offer to buy them out.

The trial moves back to Detroit on Wednesday, when Friedman resumes questioning Bren assistant and Irvine Co. Senior Vice President Gary Hunt. Smith, Clark's daughter and a prominent Orange County resident, says she will also take the stand in Detroit before the trial ends.

Advertisement
Los Angeles Times Articles
|
|
|