Auto-Train Corp. yesterday reconvened its annual shareholders meeting, then immediately adjourned it, leaving a handful of angry shareholders with unanswered questions about the Washington railroad's financial problems.
The annual meeting was recessed two weeks ago after the company failed to get the majority of votes needed to approve creation of a new class of preferred stock. At that time, Auto-Train President Eugene K. Garfield said he would use the delay to solicit shareholders and get the necessary votes.
Instead -- during the recess -- the company dropped its proposed preferred stock plan and came up with a new financing plan that does not require the approval of shareholders.
Auto-Train now says it plans to try to sell 1.5 million new shares of common stock plus warrants for another 1.5 million shares.
Saying the change in financing plans left no business to be conducted at the shareholders' meeting, Garfield yesterday gaveled the session to a close a couple of minutes after its opening.
In an interview afterward, Garfield was asked whether the company had adopted the new stock plan to avoid the need for shareholder approval. "The answer is no," he replied, saying he could not explain further because of Securities and Exchange Commission regulations on new stock offerings.
The brief meeting and Garfield's refusal to take questions from the audience angered shareholders. "This is the worst example of management arrogance I've seen in my life," complained John G. Luntz of Fairfield, Pa.
"I'm offended. This is an outrage," lamented Charlotte Genn of Washington, who came armed with a list of questions.
Former Auto-Train board member Arthur C. Gilbert accused Garfield of withholding information about the company's problems and of making misleading statements.
Gilbert charged that present shareholders will lose nearly two-thirds of the value of their investment under Auto-Train's plan to issue new stock. The company has 1.6 million shares outstanding and issuing another 3 million will severely dilute the present shares, he said. "Are the officers going to give up two-thirds of their salaries since the shareholders are losing two-thirds of their investment," he asked.