The board of directors of American Medical International on Tuesday accepted the resignation of Walter L. Weisman as chairman and chief executive of the hospital chain and named a sitting member of the board, Royce Diener, as interim successor.
The special session of the board, held at the company's Beverly Hills headquarters, was prompted by a directors' committee that concurred with the company's four largest shareholders after they demanded that Weisman be replaced, the company said Monday.
That same committee, which includes 13 of the board's 17 members, recommended that Diener replace Weisman on an interim basis. Diener, who was AMI's chairman from 1979 until last January, served on the committee that withdrew its support for Weisman.
The "Big Four" stockholders include a company owned by Sid Bass and other members of the wealthy Bass family of Ft. Worth, with 10.7% of AMI's shares; M. Lee Pearce, a Miami doctor, with 7.5%; Wedge Group, a Houston-based conglomerate headed by Richard Blohm, with 7.2%, and Investment L.P., a Ft. Worth-based partnership led by former Bass adviser Richard Rainwater, with 7%.
Responding to recent developments, Standard & Poor's Corp. said Tuesday that it has placed AMI on its Creditwatch list "with negative implications," meaning that S&P may downgrade the credit rating of AMI's debt.
Weisman's resignation, S&P said, "raises concern over American Medical's ability to reverse the poor operating performance of its 85 domestic hospitals. . . . Uncertainty related to possible changes in financial policy brought about by new management is another concern."
The Creditwatch listing was just one sign of AMI's uncertain standing in the financial markets since the anticipated management changes were announced. Wall Street was agog with speculation about the intentions of the Big Four stockholders. Some Wall Street analysts said the Big Four might be planning a leveraged buyout of the company. However, many other analysts said Pearce and other investors no longer have a motive for such an acquisition.
"If Pearce wants to be on the board or have an aide appointed to the board, he can now do that without buying the company," said David Lothson, an analyst at Paine Webber. "Weisman was Diener's hand-picked protege. It looked like he (Diener) went along with everything he (Weisman) wanted to do. . . . The fact that Diener has helped to throw him out makes it look like they're going to let them (the Big Four) run things."