One of the largest shareholders of Storer Communications Inc. voted in favor of the company's incumbent directors at its annual meeting Tuesday, possibly sealing a victory for Storer's management in the proxy fight against a group of dissident shareholders.
Ironically, that shareholder -- Alliance Capital Management Corp. -- is a subsidiary of Donaldson, Lufkin & Jenrette Securities Corp., the financial adviser for the dissident shareholder group. The dissident group owns 5.3 percent of Storer and is led by the New Jersey investment firm of Coniston Partners.
Theodore Fitilis, vice president and media analyst for Alliance, said in a telephone interview yesterday that Alliance, a New York investment firm, voted more than 1.2 million shares in favor of incumbents and that "hundreds of thousands" of additional shares were voted for incumbents by Alliance clients.
Storer, a giant Miami-based broadcasting and cable television firm, has about 16.4 million shares outstanding. Storer recently agreed to be acquired by Kohlberg, Kravis Roberts & Co. in a leveraged buyout valued at about $1.86 billion. That buyout was contingent on at least a majority of Storer incumbents being re-elected.
In this leveraged buyout, a small group of investors would acquire Storer stock using borrowed funds. The investor group would use the company's assets as collateral for the funds it borrows and pay interest on the borrowed money out of cash generated by the company in the future.
Fitilis said he didn't know the results of the proxy fight, but he said the vote "could have been close." He said that he came to the annual meeting with both cards "just in case," referring to the white proxy card for management and the blue proxy card for the dissidents.
Although he came to the meeting intending to vote for management, Fitilis said there was some last-minute pressure on the part of the Coniston group, which is being advised by Fitilis' parent firm.
Fitilis said he was largely responsible for Alliance's large buying program earlier this year in Storer stock, making purchases before Donaldson, Lufkin & Jenrette became involved with the dissident group. At one point in March, Alliance owned about 2 million Storer shares, but the company has reduced its position since then, he said.
Polling in the Storer proxy contest was closed Tuesday after Storer's annual meeting in Bal Harbour, Fla. The meeting was adjourned until May 17 to allow time to count ballots in the cumulative voting for directors. Storer has said it is confident it will win the proxy fight.