If you decide to leave SLU stock in this market

[GOSLU68]

Inadvertantly found this when I wanted to see something about Alberici wind turbines; it gives you a goal for leaving the largest gift to SLU

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Friday, September 5, 2008

SLU tries to cash in its 70% stake in Alberici

St. Louis Business Journal - by Rick Desloge

Saint Louis University and Alberici Corp. are fighting in court as the university tries to cash in its 70 percent stake in the privately held construction company.

Alberici officials have said they can’t afford to purchase the stake from Saint Louis University and a sale would force the company to liquidate. SLU officials said if they can’t reach a deal with Alberici, the university may seek to sell the shares to someone else.

The dispute pits one of St. Louis’ top universities against one of the region’s billion-dollar private companies over a gift the late Gabe Alberici made to SLU at the time of his death in 2002. The construction company magnate was a major benefactor to the university during his lifetime, capping his gifts with the 70 percent stake in the business — a gift of 5.8 million Class B non-voting shares of common stock.

The fight has been simmering since late 2006. It escalated a year ago when SLU, through its attorneys at Lewis, Rice & Fingersh, began sending letters to Alberici to discuss redeeming its interest in the company, according to a lawsuit SLU brought against Alberici on April 22, 2008, in St. Louis County Circuit Court. In the suit, SLU seeks access to financial documents from the construction company.

The latest salvo came Aug. 27 when SLU filed a legal brief supporting its request to force Alberici to give SLU the financial records it seeks. Alberici, in documents it filed June 2, had balked at the request, in part because the university has said in court documents it would consider selling its Alberici shares to a third party if it is unable to reach an agreement with Alberici’s management on the value of the SLU shares.

While SLU explores its options relating to its Alberici stock, “we expect to more closely monitor the performance of this significant investment,” Jack Pruellage, managing partner of Lewis, Rice, said in a letter to Alberici dated Aug. 10, 2007, filed in the case.

SLU is seeking copies of quarterly reports, minutes of shareholder and board meetings, copies of financial projections, and all stockholder transfer information since Jan. 1, 2007.

Alberici said it had made its records available for inspection at the company offices but would not produce copies of the documents until SLU signed Alberici’s confidentiality agreement — a demand Alberici made because the SLU board of trustees includes top executives from some of Alberici’s competitors, according to answers Alberici filed in the case June 2 through its outside counsel, John Petite of Greensfelder, Hemker & Gale.

SLU’s 48-member board of trustees, the governing body of the university, includes construction executives Robert Clark, chairman and chief executive of Clayco, and Thomas Dunne Sr., chairman and chief executive of Fred Weber Inc.

Alberici Corp. is one of the largest private companies in the region, and No. 51 in the nation, with revenue reported at $1.1 billion for 2007 and a staff of 425, according to Business Journal research published March 28. In addition to SLU, the construction company is owned by its employees. The company is led by Greg Kozicz, president and chief executive, and Gabe Alberici’s son, John Alberici, chairman of the board.

Nothing happened with the stock gift between 2002 and 2006 partly because of the time it took the Internal Revenue Service to review the transaction, John Alberici said.

In court documents, Alberici said it agreed to provide SLU with certain financial information it requested in late 2006 or early 2007 to help SLU value its stock, and SLU and Lewis, Rice entered into confidentiality agreements with Alberici at the time. The agreements were in place July 25, 2007, when Alberici said in the lawsuit it received SLU’s “take-it-or-leave-it” proposal for a purchase price.

“The ‘fair’ purchase price demanded by SLU would result in a gift to SLU that would dwarf any other single gift or contribution by any private benefactor in the history of SLU,” Alberici said in court documents. Neither side has disclosed the value of the shares. The largest donation to SLU, made public, was a $30 million gift in 2006 from the family of Edward Doisy, former professor at the SLU School of Medicine, for the Doisy Research Center.

A June 27 report from a unit of financial information firm Dunn & Bradstreet estimated Alberici’s net worth at $153.5 million.

Kozicz said Alberici is looking to the court for an answer on whether the company is being reasonable in its demands for SLU to protect Alberici’s confidential information.

SLU said in the filing that the university has many generous benefactors like Gabe Alberici. “Those benefactors, including Mr. Alberici, do not intend for their gifts to be empty tokens to the University. To date, the only benefit of this gift went to Mr. Alberici’s heirs in the form of saved estate taxes. Thus, the University must endeavor to find a purchaser now that Alberici refuses to even meet to discuss a sale transaction,” SLU said in the Aug. 27 filing.

SLU said in the documents it has an obligation to its students, alumni and faculty to sell the shares given to the institution by Gabe Alberici, and it has offered them to Alberici for an appraised value that was used for estate tax return purposes, “an amount significantly less than Alberici’s book value.”

Alberici said in its June 2 filing that SLU’s requested purchase price for its shares was based on a five-year-old valuation that did not take into account Alberici’s financial performance since then, or “Alberici’s inability to pay the excessive purchase price demanded by SLU.”

Alberici also has alleged SLU is seeking Alberici’s information “for an improper purpose,” to misuse its rights as a shareholder to get a higher value for the Alberici stock.

SLU called that argument baseless in an Aug. 27 filing, and said Alberici assumes it is required to redeem the shares, which it is not.

“These kinds of allegations against the University have no basis in fact and are particularly disturbing when made against the owner of approximately 70 percent of the equity of Alberici,” SLU said in the filing.

Meanwhile, Alberici, which has built and remodeled numerous structures on the SLU campus over the years, continues to work on construction projects at the university, according to John Alberici. He served on the SLU board of trustees until earlier this year when he rotated off the board as part of the normal course of business. The lawsuit “is not harming our relationship” with the university, he said.

“With SLU as a significant shareholder, and the possibility they will be a significant shareholder for a significant time, we’re really trying to establish the protocol (for distributing Alberici’s information),” Kozicz said.

“We wish we could have arrived at an answer more amicably,” he said. “They’ve not dealt with this before; we’ve not dealt with this before. We have an obligation to manage for all shareholders. As we go into an economic downturn, does it make sense to redeem shares at this time?”

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[Major Majerus]

Hmmm...non voting shares - they can't be worth much on the open market, unless the B shares can force liquidation...but that destroys the value of a going concern... SLU should be looking for dividends, which are tax free to them.

[davidnark]

Hmmm...non voting shares - they can't be worth much on the open market, unless the B shares can force liquidation...but that destroys the value of a going concern... SLU should be looking for dividends, which are tax free to them.

It's a privately held company, there is no open market on which they can sell the shares.

[cheeseman]

Why would you not just set up a plan that allows SLU the opportunity to sell a % of the shares each year over time? Seems that would satisfy both parties needs.

[billiken_roy]

Why would you not just set up a plan that allows SLU the opportunity to sell a % of the shares each year over time? Seems that would satisfy both parties needs.

well unless biondi is afraid of alberci going away and he getting nothing. that or maybe he has plans for that giant infusion of cash that stock sell would bring.

[cheeseman]

well unless biondi is afraid of alberci going away and he getting nothing. that or maybe he has plans for that giant infusion of cash that stock sell would bring.

I understand your points but SLU would get more money my not putting the company under stress when borrowing money is so hard right now. I wonder if another firm has offered to buy the stock from SLU?

[Clock_Tower]

Before every assumes SLU is the bad guy in this, would someone please tell me why SLU still have the documents it needs to determine the value of the stock gift it received when Gabe A. died 6 years ago. How long must SLU wait? 6 years Alberici has had to finance and/or buy out SLU. How much in life insurance and other assets did the family receive 6 years ago? Why has not Alberici slowly been buying back the stock from SLU these past 6 years?

BTW, privately held stock usually does not pay regular or large amounts of dividends like publicly traded stock so I doubt SLU has received any money these past 6 years.

As far as other company offers? The Business Journal indicated that SLU is trying to shop the stock, no doubt has an interested investor or two, but needs financial information to value the company and the company stock. Alberici is refusing out of fear that the info will fall into competitors hands and therefore the info has not been provided. No info...No offer to purchase.

[cheeseman]

Before every assumes SLU is the bad guy in this, would someone please tell me why SLU still have the documents it needs to determine the value of the stock gift it received when Gabe A. died 6 years ago. How long must SLU wait? 6 years Alberici has had to finance and/or buy out SLU. How much in life insurance and other assets did the family receive 6 years ago? Why has not Alberici slowly been buying back the stock from SLU these past 6 years?

BTW, privately held stock usually does not pay regular or large amounts of dividends like publicly traded stock so I doubt SLU has received any money these past 6 years.

As far as other company offers? The Business Journal indicated that SLU is trying to shop the stock, no doubt has an interested investor or two, but needs financial information to value the company and the company stock. Alberici is refusing out of fear that the info will fall into competitors hands and therefore the info has not been provided. No info...No offer to purchase.

The article in the Post today did paint a different picture - more like you are saying. My comments were not a knock on SLU - just wondering why a solution could not be worked out that suits both sides. I do agree, it should not take 6 years to get this info and I guess the lawsuit was the only path SLU had.

[GOSLU68]

The article in the Post today did paint a different picture - more like you are saying. My comments were not a knock on SLU - just wondering why a solution could not be worked out that suits both sides. I do agree, it should not take 6 years to get this info and I guess the lawsuit was the only path SLU had.

My point in the title of this topic exactly. The family or the corporation gets a huge write off for a donation

worth x or $70,000,000 in this case. However, the university now has a huge potential asset which must have some liability as well and no way to realize any income. This is very poor planning for a gift that should have been major to the university but instead becomes a source of legal fees and squabling with the donor family who should all feel good about what their patriarch did for the university. They probably did not even get Billiken Club points. And the University has a piece of paper they can't collect on.

[cheeseman]

My point in the title of this topic exactly. The family or the corporation gets a huge write off for a donation

worth x or $70,000,000 in this case. However, the university now has a huge potential asset which must have some liability as well and no way to realize any income. This is very poor planning for a gift that should have been major to the university but instead becomes a source of legal fees and squabling with the donor family who should all feel good about what their patriarch did for the university. They probably did not even get Billiken Club points. And the University has a piece of paper they can't collect on.

Maybe someone with more knowledge of non-voting shares stuff can explain what recourse does a non-voting share owner have to sell?

[Clock_Tower]

Maybe someone with more knowledge of non-voting shares stuff can explain what recourse does a non-voting share owner have to sell?

Often times, very little. Courts are often reluctant to step in and assist "oppressed" shareholders on the theory that the partners/partnership may have intended such consequences. A 51% owner can, and often does, stick it to the 49% owner. Similary, voting shareholders can, and often do, stick it to the non-voting shareholders. The short answer is that an owner's rights often depend upon the partnership agreement. When the agreement has few or no answers, then parties' turn to the Courts for relief.

[Box and Won]

Often times, very little. Courts are often reluctant to step in and assist "oppressed" shareholders on the theory that the partners/partnership may have intended such consequences. A 51% owner can, and often does, stick it to the 49% owner. Similary, voting shareholders can, and often do, stick it to the non-voting shareholders. The short answer is that an owner's rights often depend upon the partnership agreement. When the agreement has few or no answers, then parties' turn to the Courts for relief.

Do the restricted shares at least provide the university with some sort of dividend or share of Alberici's profits?

[willie]

Do the restricted shares at least provide the university with some sort of dividend or share of Alberici's profits?

You would assume they would pay some kind of dividend. Unless there is some kind of formalized profit sharing, profit might just flow back into the company.

[Clock_Tower]

Do the restricted shares at least provide the university with some sort of dividend or share of Alberici's profits?

I do not know. As a general rule, though, public companies are concerned about their stock price and are under pressure to keep it high by paying regular dividends. Private companies are not under these pressures. Very small private companies usually pay no dividends but instead take money in salary or reinvest most/all back into the company. Over the year, I have seen situations where companies report dividends or distributions but then not distribute the money to even cover the tax liability. Some private company stock fights can get real nasty. Alberici could be anywhere in between.

[GOSLU68]

Do the restricted shares at least provide the university with some sort of dividend or share of Alberici's profits?

I wasn't trying to solve the SLU vs Alberici dilemma. My point was for future benefactors to clear up their bequest as they are going to waste the valuable time of their heirs whether famial or university. If you leave something you obviously can't kill the goose laying the golden eggs to tying them

down to say buying back a million shares each year because there are bad business cycles. You also can not expect the University to be too grateful if

the get a notice from the trustees that they now have an ownership relationship in something that may never bring them any money. It could be the equivalent of getting free deeds to swampland in Florida in the 1940's and 1950's innaccessable at best.

[Box and Won]

So what was the point of Alberici giving the shares to the university? To help ensure that the company would continue to get business from SLU after Mr. Alberici's passing?

[GOSLU68]

So what was the point of Alberici giving the shares to the university? To help ensure that the company would continue to get business from SLU after Mr. Alberici's passing?

He's been gone for 6 years whoever sees him first can ask?

[Box and Won]

He's been gone for 6 years whoever sees him first can ask?

I wasn't trying to be a smart-ass, I was just curious as to why he would leave the university the shares as opposed to cash, property, etc. I would think that most people would rather give the shares to family members or key employees.

[GOSLU68]

I wasn't trying to be a smart-ass, I was just curious as to why he would leave the university the shares as opposed to cash, property, etc. I would think that most people would rather give the shares to family members or key employees.

my wife knows some things about University development at a different U. but still applies in a vague way.

She says there could be tax right offs giving to a 501C3 if I got it right and if the lawyer got it right and in this case if the lawyers for the receiver of the gift was not consulted they may not have it in a form that is

best for them. As everyone else posted these are Class B shares so we don't know the restrictions or the

benefits to owning the shares. It is not necessarily the same as owning common stock in a private or publicly traded company. Usually, minority stockholders can demand to see records and be a pain in the

but if you are used to running the company like you owned 100% and then its just you, your conscience, and the tax people.