Planning For The After Posner Party

Victor Posner is so disliked by Wall Street that he has turned investors off to the asset-rich conglomerate he controls. Institutional investors have chosen to ignore the company even with the controversial Miami financier on the way out as chairman and CEO. But some smart-money investors have started buying in despite the complexity of a court-ordered settlement designed to force out Posner, who has a 46.2% stake in DWG. These pros argue that with Posner's impending ouster, the stock, which has edged up from 8 a share in mid-June to 11, could be worth 20 to 25.

That value is based on the company's underlying assets, says Mike Connor, investment strategist at Fahnestock. He assumes that a post-Posner management will either sell off certain assets or manage them effectively for the benefit of shareholders. DWG's businesses include Arby's, which operates and franchises a total of 2,500 restaurants; soft-drink maker Royal Crown Cola; and National Propane, a distributor of liquefied petroleum gas in 19 states, primarily in the West.

The change in management, says Connor, could bring about a rapid improvement in DWG's financial performance and clear the way for realizing the company's real worth. DWG has been in the red since 1989, but Posner has resisted several buyout offers, either for the company as a whole or its subsidiaries. The last attempt was a 1989 offer by Granada Investments to purchase DWG at $22 a share.

EASING OUT. Posner rejected the bid, and some shareholders sued. As part of a settlement, U.S. District Judge Thomas Lambros in Cleveland appointed three outsiders to the board. After more than a year of trying to correct alleged corporate mismanagement and wrongdoing by Posner, the board, with the court's support, designed a plan to force him to relinquish control.

Part of the deal is for Posner to sell half of his stake to a New York investor group led by Nelson Peltz and Peter May at $12 a share. The rest of Posner's stake is to be converted into nonvoting preferred shares, convertible into common stock at $14.40 a share. Posner will then relinquish his postsof chairman, CEO, and director. Shareholders and the court have yet to ratify the settlement, and Judge Lambros is scheduled to hold a hearing on Nov. 17.

If for any reason the court rejects the proposed settlement, two other investor groups are eagerly waiting in the wings to propose their own takeover of DWG, says a New York investment manager. One group is led by money manager Mike Steinhardt, who owns about 4% of DWG's stock.

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