Occidental Petroleum Chairman Armand Hammer has purchased more than $3 million worth of stock in Financial General Bankshares Inc. and is trying to negotiate a truce in the long and costly fight for control of the Washington banking company.
Hammer, who has been a Financial General shareholder and a member of the board of directors since 1977, has tripled his investment in the company in the last three months.
The 80-year-old California financier now owns 5.2 percent of Financial General-315,000 shares of stock-making him one of the six largest shareholders, the proxy statement for FG's annual meeting discloses.
Hammer has talked with another major FG shareholder, Eugene B. Casey of Gaithersburg, about trying to end the fight between the company's management and the group of Middle Eastern investors who are trying to buy control of the company, Casey confirmed.
Casey, and FG board member who owns about 9 percent of the company, describes the dispute as "not hopeless, but very nearly so."
Casey said he has also talked with attorneys for the middle Eastern investors in hope of ending the fight. "I'm trying to get it settled, but its a total stalemate," said Casey.
Casey said Hammer has purchased additional FG stock" to put himself in a better position to deal with" the management of the company.
In January, the proxy discloses, Hammer bought 219,500 shares of Financial General from Stephens Inc., a Little Rock, Ark., investment firm. He reportedly paid $14 a share.
Recently Hammer agreed to buy another 10,900 shares of Financial General stock from Washington attorney R.Robert Linowes. That sale has not yet been completed, Linowes said yesterday.
Linowes and persons familiar with the Stephens transaction said both blocks of stock were sold to Hammer in hope that he could use his financial clout and personal influence to end the take-over fight.
"I would hope he (Hammer) will be able to bring this to a resolution," Linowes said, "I just feel there's no future in extended litigation."
A former FG board member, Linowes resigned as a director a year ago and now is selling his stock, he said, because "the company isn't going anywhere because of this."
Both Casey and Linowes complained that the takeover fight is costing Financial General Millions of dollars and is distracting the company's management from operating the business.
Since January, 1977, when the takeover fight began, it has spawned six lawsuits and a series of administrative proceedings. The company's legal fees now are running between $110,000 and $120,000 a month, Casey said.
Linowes was a member of a group of investors assembled in 1977 by J. William Middendorf, ii, to buy control of Financial General from international Bank of Washington.
Linowes is the latest of several members of that group to break with Middendorf. The defections have severely eroded the stock holdings that allowed Middendorf to become president of the $2.2 billion bank holding company.
In the annual meeting notice Middendorf discloses he personallly owns about 50,000 shares of stock in the company, but claims to control 1,656,000 shares through proxies.
More than half of those proxies have been challenged in a lawsuit, however, and the precise number of shares that Middendorf can count on has not been determined.
According to the biggest shareholderis FG Chairman B. Francis Saul,II,who controls more than 1 million shares-17.8 percent-through personal holdings and companies he heads.