DALLAS (HedgeWorld.com)–Ranger Governance Ltd, part of the hedge fund manager Ranger Capital Group, filed a preliminary proxy statement with the Securities and Exchange Commission on June 27, indicating plans for another effort to take over New York-based Computer Associates International Inc.
Computer Associates’ 2002 annual meeting is scheduled for Aug. 28, with a date of July 3 for shareholders of record. Ranger represents in its proxy that it is the holder, as of that date, of 100 shares of Computer Associates. It is also the owner of options to purchase close to 1.5 million shares, the bulk of which (1.3 million) have an exercise price of $25.08 per share. This is roughly $9 above the current market value of that stock.
Sam Wyly, the Texan who created Ranger Capital and Ranger Governance, is unhappy, in particular, about Computer Associates’ “poison pill,” a by-law that makes any prospective tender offer prohibitively expensive. He contends that during last year’s proxy fight, Computer Associates’ management said it would abandon the poison pill, but it has not done so. Computer Associates has since revised the poison pill in certain respects, but only well short of abolition.
The incumbents won last year’s board election, turning back Mr. Wyly’s last proxy drive, largely due to the loyalty of such institutional shareholders as State Street Bank, and Fidelity Investments, both in Boston (Previous HedgeWorld Story). The campaign seemed to many observers a personal feud between Mr. Wyly and Computer Associates’ Chairman Charles B. Wang.
This year, on March 25, Mr. Wyly sent a letter to the directors of Computer Associates. He asked that its independent directors meet with Ranger officials to discuss the removal of Computer Associates’ management, Chairman Wang, Sanjay Kumar, president and chief executive officer, and Russell M. Artzt, executive vice president. At the same time, Mr. Wyly began contacting shareholders about the possibility of another proxy fight.
On April 25, Computer Associates’ largest shareholder, Walter Haefner, Zurich, Switzerland, said in a letter to Mr. Wyly that he continues to support the current management team. “I believe that despite difficult conditions, they have produced good results… It is also clear that the type of change you suggested is not constructive. In fact, in my view it is hurting both the company and its shareholders.”
Ranger Governance’s filing with the SEC said that it would nominate five candidates to the 11-member board of directors of Computer Associates. Its nominees are: Steven Perkins, Richard Agnich, Cece Smith, Ronald Robinson, and Max Hopper.
This list has a distinctly Texas flavor. Mr. Perkins is the president of Ranger Governance. Mr. Agnich is the former general counsel for Texas Instruments Inc. (1988 to 2000). Mr. Hopper is the president of Max D. Hopper Associates Inc., Dallas, a consulting firm focusing on the strategic use of advanced information technologies. Ms Smith chaired the federal reserve bank of Dallas, 1994 to 1996. Mr. Robinson is the head of the department of petroleum engineering at Texas A&M University.
In accord with federal proxy rules, Ranger has identified the five incumbents whom its five nominees, if elected, will unseat. They are Messrs. Wang, Kumar, Artzt, New York- based investment banker Willen F.P. de Vogel and former U.S. Senator Alfonse D’Amato.
The SEC filing said that since the 2001 summer meeting, the price of Computer Associates stock has fallen from $32 to $16 per share. Since peaking on January 26, 2000 at $74.56, the stock has lost 78% of its value. In February 2002, Standard & Poor’s revised its credit outlook on Computer Associates from stable to negative.
Nonetheless, on Friday Ranger’s cause suffered a setback with an announcement by one of the major institutional shareholders, Private Capital Management LP, a Naples, Fla.-based SEC-registered investment adviser. PCM said that it supports the management, and believes Rangers’ latest proxy fight is “without merit, self-serving to the detriment of shareholders, and nothing more than an attempt to confuse, distract, and stagnate the operations and progress made by Computer Associates.”