Financier Joe L. Allbritton told a federal court yesterday not to worry about his ability to pay millions of dollars in interest on the money he borrowed to buy control of the Riggs National Bank. He has it in cash, he said.
Twice blocked by the court in his attempt to gain control of the city's largest financial institution, the former Washington Star owner filed papers in court yesterday disclosing some detail about his finances and otherwise trying to answer objections raised by a federal judge who has barred the takeover temporarily.
The filings accompanied a request to U.S. District Court Judge Norma Holloway Johnson to vacate or reconsider a preliminary injunction holding up Allbritton's efforts to buy a majority interest in the bank.
No hearing has been set on that motion, but a deadline that would have halted Allbritton's offer to buy Riggs stock at midnight Thursday was pushed back to next Thursday.
Papers filed yesterday by Allbritton's attorneys included proposed disclosures that Judge Johnson had indicated should have been in the initial offer. Allbritton asked that the court order be removed because the additional information "will cure all violations found by the court in its order."
The newly filed data appeared to cover many of the objections that Riggs had raised and which the court in effect had seconded. Riggs management asserted that Allbritton had failed to give shareholders sufficient information on which to base a decision whether to sell their stock when he made his offer Feb. 9 to buy at least 600,000 shares at $67.50 each.
Included in the papers filed yesterday were assertions by the banks that lent Allbritton the estimated $70 million for the proposed stock purchase that they would not declare the loan in default if a holding company were formed.
Allbritton also proposed to amend the tender offer to note that there is a question of whether the comptroller of the currency needs to evaluate the tender offer separately from Allbritton's earlier stock purchases. The comptroller had noted that he had no objection to an earlier major purchase of stock by Allbritton. Allbritton's lawyers argued that because Allbritton also indicated that he might buy an additional 600,000 to 700,000 shares and no objection had been raised that the issue was closed.
They told the court yesterday that they were taking steps to make it crystal clear that the comptroller, who has jurisdiction over national banks, does not quarrel with the acquisition.
"The purchaser, however, will not purchase any shares pursuant to the offer until the comptroller has indicated that he does not intend to disapprove the purchase," the proposed amended disclosure noted.
Beyond that, the filings included a proposal to lay out the legal struggle over the bank's control in the tender offer for any shareholders who might have missed it and included several pages of information about Allbritton's assets.
His net worth is "conservatively valued at $200 million," according to the filings. His three television stations (the major one is WJLA-TV, Channel 7, in Washington) are worth about $138 million, his three newspapers are worth about $1.8 million and a Texas bank holding company is worth approximately $15.5 million. It went on in that vein.
Interest payments on the money he borrowed to buy bank stock shouldn't be any problem, the papers said. Although the interest charges will be between $10.3 million and $12.3 million the first year and between $7.8 million and $9.7 million in the final year of the two-year loan, Allbritton expects to have $20.9 million in cash the first year and $16.3 million the second.
If his assets and liabilities were stated in terms of the cost at which he acquired them rather than in terms of their current worth, Allbritton's liabilities would exceed the aggregate cost of his assets by about $6.5 million, he said. But Allbritton's attorneys have argued that using cost rather than current value to describe his assets and liabilities has limited value in portraying his financial standing fairly.
When the borrowings come due, Allbritton expects to refinance them or use the sale of existing assets to pay them off, according to the filings. Among the assets he has considered selling is University Bancshares, a Texas banking company, or his interest in another bank, he said.
Countering arguments that Riggs has made that he will form a bank holding company with Riggs and strip it of its assets to repay the loans, Allbritton gave shareholders specific assurances that he would not use such a company's funds other than ordinary dividends paid to all stockholders.