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Ribapharm Execs Resign to Settle Feud With ICN

Departure of CEO and six others at the drug maker ends litigation between the firm and its majority owner over independence.

January 23, 2003|James F. Peltz | Times Staff Writer

The chief executive and other top management of Ribapharm Inc. abruptly quit late Wednesday to settle a bitter feud between the drug maker and its majority owner, ICN Pharmaceuticals Inc., which had threatened to oust the executives.

Johnson Y.N. Lau, Ribapharm's chairman and CEO, and four of its other five directors resigned immediately. So did Thomas Stankovich, Ribapharm's chief financial officer, and Roger Loomis, its general counsel.

All left "to let Ribapharm move on following recent differences with ICN," which owns 80% of Ribapharm, the companies said in a joint statement. No successors were announced immediately.

ICN created Ribapharm, leased space to its progeny at its Costa Mesa headquarters and in April sold 20% of Ribapharm to the public.

ICN also had planned to spin off the remaining 80% of the company, but after ICN had a change of management last summer, the spinoff plans were placed on hold.

Lau and Ribapharm publicly protested the delay. ICN, in turn, alleged that Lau and the other board members mismanaged Ribapharm. To protect its interest in the company, ICN said it planned to oust Lau and the other directors.

Ribapharm then countersued, claiming ICN had defrauded the public by not carrying out the Ribapharm spinoff as planned.

The litigation was settled as a result of the executives' resignations, the companies said.

It was not immediately clear what will happen to Ribapharm now that its top management is gone, and company executives could not be reached for comment late Wednesday.

There has been speculation that ICN might buy back the 20% of Ribapharm now held by public stockholders. Before the announcement, Ribapharm shares rose 45 cents to $6.45, and ICN gained 11 cents to $11.01. Both trade on the New York Stock Exchange.

Ribapharm's sole product, ribavirin, is used for treating patients with the liver disease hepatitis C, and it has been a successful drug. Because of its majority control, ICN consolidates royalties from the drug's sales into its financial results, and some analysts have said that is the only reason ICN has made money from its operations lately.

The other resigning directors were Kim Campbell, Arnold Kroll, Hans Thierstein and John Vierling.

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