A Washington investment group making a bid for control of Easco Corp. has increased its stake in the Baltimore-based hand tools firm to 17.3 percent and has accused the company and its chief executive of violating securities laws.
Equity Group Holdings, the Washington investment partnership owned by brothers Steven M. Rales and Mitchell P. Rales, reported that it has purchased 8,400 additional Easco shares for prices ranging between $18.875 and $19.00 per share. The additional purchases raised the group's total stake to more than 1.23 million shares at an overall cost of $18.38 million, according to a recent filing with the Securities and Exchange Commission. Easco has about 7.12 million common shares outstanding.
Easco, seeking to thwart the Rales brothers' attempt to gain control of the company, filed suit in January in federal court in Baltimore charging that the investment group violated federal securities laws. The investment group has charged in a counterclaim to that suit that Easco had violated state securities laws.
The Rales brothers, who are now Easco's largest stockholders, said in their counterclaim that they have been unable to obtain the Easco stockholder list, which they say they need to pursue an attempt to replace Easco's board of directors. Easco and Equity Group officials could not be reached for comment.
The brothers also allege that Easco's directors violated Maryland securities laws by making changes in its rules which limit a stockholder's ability to bring new business before an annual meeting of the shareholders.
In an SEC filing earlier this year, the Rales brothers said that they intended to nominate their own slate of directors to Easco's board. In February, the Rales brothers asked for Easco for its list of stockholders. The company wouldn't release the list; and in another Equity Group counterclaim, the Rales brothers said that, in withholding the list, Easco has taken "an unfair and inequitable advantage."
The Equity Group counterclaim also asserts that Easco has violated federal law by soliciting proxies for the 1985 annual stockholders meeting without making the required filing with the SEC and without sending stockholders a report for 1984 or furnishing them a proxy statement.
The Rales brothers began acquiring Easco shares aggressively last September. In January, they tried to buy the company in a cash offer of $18.50 a share, or about $171.5 million, for all of the Easco stock that they did not already own. At that point, they had already spent $16.4 million for Easco shares.