Kaiser Shareholders To Vote On 2-Tiered Stock Plan

Kaiser Aluminum Corp. shareholders next week are expected to approve a plan that allows the Houston-based company to raise money while insulating it from an unfriendly takeover.

Kaiser, which operates two factories in Spokane, has asked its 7,000 shareholders to adopt a two-tiered class of stock.

The two-tiered plan would convert every 100 shares of Kaiser stock into 33 shares of Class A stock and 67 shares of common stock. Each Class A share would get one vote, while secondary stock would get one vote for every 10 shares.

Both classes would be traded on the New York Stock Exchange. The plan would authorize up to 100 million Class A shares and 250 million shares of the common stock.

Shareholders will vote on the proposal April 10 in Houston. The change, if approved by the majority, would go into effect almost immediately.

Scott Lamb, Kaiser’s director of investor relations, said the two-tiered system is commonly used by companies who have a single large shareholder, significant debt and the desire to expand.

Maxxam Inc., a Houston-based holding company, controls 62 percent of Kaiser. But Kaiser has long-term debt of about $750 million, with covenants that require it to retire portions of the debt if Maxxam’s ownership slips below 40 percent.

The two-tiered arrangement would free Kaiser to finance acquisitions or internal growth by issuing additional shares without diluting Maxxam’s controlling interest. Under the plan, Maxxam could sell two-thirds of its stake in Kaiser and still retain voting control, according to a Kaiser statement sent to shareholders.

The plan also makes it more difficult for an unwanted suitor to acquire control of Kaiser.

, DataTimes