A major investor in Beverly Hills-based American Medical International has called for the removal of Chairman Walter L. Weisman and threatened to challenge the firm's board, according to documents filed with the Securities and Exchange Commission.
M. Lee Pearce, a Miami doctor who owns 7.5% of AMI's common stock, said in the filing that he may ask shareholders to select a new board if the current directors do not remove Weisman from the hospital chain's top spot. The document also said Pearce, a vocal critic of AMI's management, or certain other shareholders may raise their stake in AMI or may sell their shares if the board refuses to oust Weisman.
Collectively, Pearce and three investment groups own nearly 33% of AMI's outstanding stock. The dispute between Pearce and AMI's management stems from Weisman's response to a proposal from one of those investment groups, a Ft. Worth-based partnership called Investment L.P., the SEC document said.
Under the proposal, Pearce, Investment L.P. and the other two groups would each get one seat on AMI's board. The proposal, presented to Weisman during meetings on July 8 and 9, also calls for the formation of a restructuring committee that would "consider and evaluate various alternatives for increasing stockholder value," according to the SEC filing. The document said Weisman opposed the proposal.
On Tuesday, AMI stock gained 25 cents a share to close at $17.375 Tuesday in composite trading on the New York Stock Exchange.
The SEC filing was the latest in a series of salvos fired by Pearce. In another filing last January, Pearce characterized AMI's performance as lackluster, expressed concern and outlined a restructuring program that called for staff reductions and the sale of underperforming assets. Pearce has since filed additional documents expressing support for the proposal by Investment L.P.
Burdened by debt to pay for acquisitions and squeezed by federal cost-cutting programs for Medicare, AMI's finances hit bottom in the second quarter of 1986, when it recorded a loss of $82 million, its first ever. The company has rebounded by launching a cost-containment program in August, 1986, drawing praise from analysts. In its most recent quarterly report, the company said it is turning around as it posted the highest quarterly earnings since the third quarter of fiscal 1985.
AMI had no comment on the latest filing. A Wall Street analyst questioned Pearce's motives and tactics. Joyce Albers, an analyst at First Boston, said: "If he wants to take over the company, why doesn't he make a tender offer?"
"The gauntlet has been thrown down," said Edwin Gordon, an analyst at Tucker, Anthony & R. L. Day. "How does (Pearce) back it up? I don't know of any board that unilaterally throws out its president. . . . If the board doesn't want to give him a seat, I don't see why they would join him on this."