If Charles E. Hurwitz, the Houston financier, has a master plan for Virginia's UNC Resources Inc., he isn't telling.
The Houston investor, who has built a financial empire with an estimated worth of several billion dollars, is not as well known in public circles as the other takeover artists to whom he is often compared, such as Saul Steinberg or Carl Icahn. When circling a possible victim, the 45-year-old Hurwitz keeps his cards very close to the chest.
But Hurwitz is finding it increasingly difficult to keep a low profile.
Last month the Maxxam Group, a New York holding company controlled by Hurwitz, reached a publicized agreement to buy Pacific Lumber, a timber and welding products company located in San Francisco, in an $864 million deal. Now the same company is turning up the heat at UNC Resources Inc., a Falls Church firm that supplies nuclear fuel and other products for the government. UNC is fighting back.
Over the past year, Maxxam has been steadily purchasing large blocks of UNC stock. As of Sept. 26, it had acquired more than 4 million shares, or 19 percent, and it had won federal approval to buy as much as 50 percent. Fearing a takeover, UNC's board of directors last week adopted a plan that would force a corporate raider to pay $50 a share to redeem millions of shares of preferred stock, a move that effectively doubles the acquisition cost from $220 million to almost $400 million.
"The belief is that any and all actions he would take are not in the best interest of the shareholders of UNC," said Bernard Kostelnik, senior vice president and general counsel of the firm, explaining the board's action. He declined to elaborate.
Hurwitz was not available for comment, but colleagues and analysts who know him say his actions at UNC are in keeping with the overall strategic plan the Texan has pursued since his early days as a highly acclaimed mutual fund manager on Wall Street. Hurwitz, they say, is an "assets player" who seeks out undervalued companies and looks for ways to take control by spending cash from the sale of assets to buy up stock from other holders.
One such target was McCulloch Oil Corp. In the late 1970s Hurwitz bought a 13 percent stake and then took control after putting his own associates on the board over the opposition of company management. After he became chairman in 1980, he brought in new officers, initiated a reorganization that included the sale of more than $100 million in assets and spun off the company's energy division, known as MCO Resources Inc. -- turning a once debt-ridden company into a profitable venture.
But Hurwitz -- whose areas of interest have ranged from oil and real estate to banking and financial services -- is also a master of feinting. In 1984, he bought 12 percent of Castle & Cooke Inc., the Hawaii-based food company, and then sold the stock back at a premium price after making threatening noises about a takeover -- classic "greenmail" -- according to court testimony by Ian Wilson, the company's chief executive.
Friends of Hurwitz say he is no corporate raider, but rather is legitimately interested in turning around the fortunes of the companies that catch his eye.
"If you look at what he's done, he's built up value," said one New York colleague, citing the profits he turned at MCO and Maxxam, formerly the Simplicity Pattern Co.
Hurwitz claims benign intentions. "I invest in companies with intrinsic value and, often, where we can help out," he once told Business Week. "I buy to build, not to sell."
Others may differ. He ran into trouble with the Securities and Exchange Commission over accusations that he violated antifraud regulations in managing the Summit group of mutual funds. He also was involved in legal scraps with some takeover victims. Just last week the grandchildren of the founder of Pacific Lumber filed suit, accusing Maxxam of misleading the firm's shareholders, though the case has been dismissed.
Given his track record, UNC executives are wary of Hurwitz's intentions for their company, which is just emerging from a protracted legal battle with the General Atomic Corp., as well as a major corporate reorganization. A Maxxam spokeswoman was cryptic, saying only that UNC shares "were acquired for investment purposes" -- a phrase of little solace to Hurwitz's past targets.