RICHMOND, OCT. 19 -- The planned $2.65 billion merger of the A.H. Robins Co. with Rorer Group Inc. got a green light today from U.S. District Judge Robert R. Merhige Jr., but he cautioned that he was not committing himself to approving Robins' reorganization plan to emerge from bankruptcy.
Merhige granted Robins' request for an order authorizing it to sign the definitive agreement on the merger, which would make Rorer the nation's sixth-largest pharmaceutical firm.
Dennis J. Drebsky, Robins' special bankruptcy counsel, told a court hearing the merger "won't be consummated for several months, at the very least," mostly because the reorganization plan faces a court review in November and then, if approved, a vote by the creditors.
Robins' principal creditors are tens of thousands of women who say they have been injured by the Dalkon Shield, the defective intrauterine contraceptive device sold by the pharmaceutical firm in the 1970s.
Drebsky said Rorer had agreed to waive a controversial provision of the definitive merger agreement that would have barred Robins from accepting an alternate bid that provided more money for shield claimants but less for shareholders.
Robins said that under the Rorer-based reorganization plan, the group of women injured by the shield would get a maximum of $1.315 billion, and the stockholders an expected $735 million. The Robins family owns an estimated 42 percent of the common shares.
Mark C. Ellenberg, counsel for the committee, said that under the law a company in Chapter 11 proceedings "must pay its creditors in full before it can provide any consideration to equity interests."
Ellenberg cited a possibility that another company will top Rorer's offer. "At least two other interested parties" have had discussions with First Boston Corp., the committee's financial adviser, he said. He did not elaborate, and he declined to comment afterward.
If a better offer than Rorer's should materialize, Merhige told Ellenberg, "Call me at home -- 24 hours a day, I'm available."
With the controversial provision stricken, a superior offer, if accepted, would entitle Rorer to so-called "break-up" fees of at least $25 million to compensate for its legal and financial expenses, the risks it has taken and lost opportunities.
In another development at the hearing, Merhige raised anew the possibility of naming a trustee to run Robins. For the first time, he also granted permission for late filing of shield claims by women who missed the court-ordered deadline of April 30, 1986, because they didn't know until afterward of their injury.
In the 26 months since Robins filed for Chapter 11, the judge has repeatedly rejected pleas for a trustee on the ground that the present management is making a lot of money for the bankrupt estate. At the same time, he has grown increasingly impatient with violations of court orders. A week ago, for example, he fined President E. Claiborne Robins Jr. $10,000 and held the corporation in criminal contempt.
Today, angered that the company had agreed without court authorization to pay $75,000 a month to Drexel Burnham Lambert Inc., its Chapter 11 investment banker, he said: "Let the world know -- the very next time there's a slip ... a sneeze in the wrong place that affects the estate" -- he will name a trustee.