The Cincinnati Enquirer from Cincinnati, Ohio • Page 38

D-4, Business Monday THE CINCINNATI i Ql 1R1 Monday, January 22. 1990 Merger: Lindner holdings spur SEC ruling Official: Merger still 'tremendous concept' questions over whether or not Lindner andor Provident still might be interested in merging with or perhaps even buying Star. For their part, Star officials have left open the possibility of a renewed merger. Star President Mark Johnson said in November that such a deal was still a "tremendous concept," adding new SEC Chairman Richard Breeden could give the banks an interpretation that would allow the merger under pooling-of-interests accounting. Mark Braykovich CONTINl ED FROM PAGE D-l Simply put, Lindner owned too much of First National's stock in the SEC's eyes.

It is perhaps the only time Lindner's stock holdings were his undoing as he tried to pull off a much-desired deal. And the merger of First National and Provident was just that. In a friendly deal valued at $234 million. First National would essentially buy Provident by giving Provident shareholders 1.1 shares of its stock for each one of their shares. Provident would then cease to exist, but Lindner would retain a sizeable chunk of the surviving company.

At the time the merger was announced, industry analysts saw the deal as Lindner's way of dramatically expanding his banking presence in the area. For First National, the merger would provide an instant defense against an unfriendly takeover while bolstering its Tristate operations. "We will now be able to meet more fully the total financial needs of our business customers," said a smiling Star Chairman Oliver Wad-dell in announcing the merger at a Sept. 13, 1988, press conference. Just weeks later, the much-publicized merger would be halted after a phone call from the SEC.

Bank officials were equally surprised and embarrassed by the outcome. Although the SEC's ruling was informally presented to the banks in early October, the opinion would not be formally stated until the drafting of an internal SEC memorandum on Nov. 11. It is that memo which the SEC fought not to release to The Enquirer for six months before acquiescing that paints the best portrait of what killed the merger. Most economical means The earlier interpretation was requested by the two banking companies a few weeks after the merger was announced.

The companies basis could not be used, meaning the companies would have to write off goodwill the price paid for a company over and above its market value. Goodwill also is not tax-deductible, so the premium First National would have paid for Provident over its actual value would have have to be deducted from earnings in years to come. The bankers believed such a cost made the deal economically unsound. In the internal memo, the SEC also questioned Lindner's intentions in buying and negotiating to buy First National stock after the announcement of the merger. According to documents filed with the SEC by First National and Provident, Lindner purchased two blocks of First National stock totaling 110,000 shares after the merger was announced.

Also, Lindner was negotiating to buy another 862,500 shares (a 6 stake) of First National. Questioning intent "The (SEC) staff had further reservations about the nature and intent of such purchases of (First National's) stock by (the Lindners) subsequent to initiation of a merger agreement," the internal SEC memo said. The memo did not elaborate. Daniel Goelzer, the SEC's general counsel, said the agency's ruling was merely an informal response. The SEC did not make an official ruling and did not force the companies to call off their merger, he said.

"The decision to terminate the proposed merger was a purely voluntary decision on the part of the companies involved," he said. Lindner, who has a policy of not speaking with media, declined to comment for this article. Provident executives would only say that the SEC documents speak for themselves. Star executives also declined to be interviewed. Something for those of you who aren't taking rvitjjian ricjj.

We've produced more top scores on the PSAT, SAT and ACT than all other courses combined. Which means if you're not taking Kaplan Prep!" you may need to take more than a 2 pencil to the test. STANLEY H. KAPLAN JbTake Kaplan Or Take Your Chances FOR INFORMATION CALL 821-2288 SAT class begins JAN. 20th ACT class begins FEB.

2nd Classes also held at some area high schools For other locations call 800-KAP-TEST 9309 Cincinnati-Columbus Rd. Suite 6 West Chester, Ohio 45069 per, they didn't. Too much stock But the SEC ruled First National stock owned personally by Lindner and his family must be treated as if it were owned by Provident since the Lindners then held a 70 stake in Provident and essentially controlled the smaller banking company. In essence, the SEC said, the Lindners should not be allowed to use an accounting approach that would not be available to Provident. They would have to be treated the same, the SEC concluded.

The Lindners' investment in First National stock would have been greater than 10 after considering exchange ratios, said the SEC, thereby violating one of the accounting guidelines. The SEC also said Lindner still could not comply even if he sold First National stock before the deal closed. Hence, a pooling-of-interests casts two hours per night of Fox programming Saturday through Monday and plans, by January, 1992, to air two hours of Fox programming every night, said station general manager Bill Jenkins. Jenkins, however, says Channel 19 will still maintain independent programming for the rest of each day. "We're an affilident, a combination affiliate and independent," he said.

"Fox has never identified themselves as a network per se (with round-the-clock programming); they're a national programming service." Will: New shows, new hopes Since the proposed merger of Star Banc Corp. and Provident Bancorp Inc. was scrapped, financier Carl Lindner has renewed his interest in Star Banc. In May, 1989, he notified the SEC that he holds a 5 stake in Star. Lindner told the SEC he owns 1.4 million shares, which cost him $29.4 million to buy.

He borrowed much of the money used to finance the purchase, including $1.8 million from his massive Cincinnati-based holding company, American Financial Corp. His move has raised new explained the deal hinged on whether or not they could, after joining, combine balance sheets and income statements in the most economic way possible. They hoped to do so under an accounting method known as pooling of interests, desirable because of the heavy costs involved in using the only other option available. The companies asked the SEC for a ruling on several questions, all of them centered on whether or not pooling-of-interests accounting could be used. "The ruling of the commission is of paramount importance because the parties will not proceed with the transaction if pooling-of-interest accounting is precluded," the banks said in their inquiry.

To meet accounting guidelines followed by the SEC in permitting the use of pooling of interests, Provident could not own more than 10 of the company that would emerge from the merger. On pa plans further additions to its 36-person staff in early 1990. Plans to design a new logo and promotional campaign using its new equipment. Has bought several shows in their first year of syndication (including Golden Girls, 227, and Amen) to air beginning next fall. It purchased several movie packages at undisclosed prices from Columbia Showcase, Viacom, and Embassy.

New titles for February include Amadeus, Superman III, and The Terminator. 'Our timing is right1 Channel 64 officials say they are able to increase their buying power because program costs have dropped dramatically in the past five years while, in the same period, Smith estimates, available advertising revenue in the Cincinnati market has jumped from $60 million to $110 million. Before Channel 64 filed for bankruptcy protection, it held less than 2 of available advertising revenues and could not afford to upgrade programming, Smith said. "Our timing is right." Smith, who declines to release revenue figures, says he doesn't expect to turn a profit in 1990 and refuses to speculate on a timetable for a turnaround, but he predicts Channel 64 will become not only the better independent station in Cincinnati, but the sole independent choice for viewers: "That's our future, especially as WXIX becomes more and more of a Fox affiliate." City's affiliate WXIX-TV (Channel 19) broad CEHDCieCEIiBaiB THE ONLY PLACE TO SEE AN ECLIPSE IN NORTHERN 1 sW 5 nVfjM lef -i DAILY-WEEKLY MONTHLY- YEARLY 24 HR. SERVICE PICK-UP DELIVERY COMPETITIVE RATES SPECIALISTS TRADE SHOWS SEMINARS TRAINING PROGRAMS 779-0030 ME Sweeney -rir yMiiriijmuuin item tm Irl-Cwittr lhcpp Cuter Priul I tnr 1IMIM A71 CONTIM'ED FROM PAGE D-l limbo until ABRY Communications (headed by Boston investors Andrew Banks and Royce Yudkoff) closed the sale this fall.

"The new ownership is made up of people who have a track record of turning around businesses," says Smith, brought in to oversee Channel 64 from his general sales manager position at Cleveland's WOIO-TV. In an interview at the station's Bond Hill offices, Smith acknowledged that "admittedly the station hasn't been able to be a legitimate alternative. But I think people's memories (concerning the bankruptcy) will only go back so far. As we change it, they'll forget about it." The first facet to change was the amount of money geared toward operating costs and capital improvements. Expensive grocery list The station is soliciting bids for $1 million worth of studio equipment; it expects to begin replacing items next month.

Within a few months, Smith promises a "state-of-the-art production facility that's able to give clients the best product in the market." The 35-item grocery list of equipment is meant to improve picture quality as well as graphic production capabilities for in-house promotions and advertisements. Among other changes, Will: Launched architectural studies designed to add 15 more space to the station's facility at 5177 Fish-wick Drive. Hired an events coordinator and an assistant chief engineer and O0S3QB (IWfGSBlW $1Qft IvU per mo. 7851 Tanners Ln. Florence, KY 41042 371-9090 fi Save time! Save money! For home delivery of The Enquirer Call 651-4500 NEW, tlEGANl, INI DINING RESTAURANT! WINTER LUNCH SPECIAL $2" KY.

Rt. 8 Wast, jusl 3 milai from Covington 291-2200 0MOO34 A MITSUBISHI 9-9 Fri. 9-6 Sat. 10-6 Featuring Ameritech Mobile Time Pack Pricing To Save You Money! Complete line of Portable Products including Motorola's Personal Telephone With every telephone you get the CelluLand committment to service that has helped us become one of the Nation's largest cellular phone dealers STOP IN TODAY FOR A DEMONSTRATION Mon. Fri.

9-6 Siit. 10-2 671-0804 12 mi. N. Tri-County Mall 48 mo. lease tax, 1st security deposit, 15,000 miles per yr.

Call classified when you want to REACH A CROWD Portable Communications Centers To place your ad, phone 421-6300 Classified Advertising Department The Cincinnati Enquirer The Cincinnati Post Air I ransportaiion 1 st Class Travel in Corporate Aircraft Turbo Prop 275 MPH Up to 6 Passengers Save Time Achieve Greater Productivity Available on Demand from and to any Airport i f' ill I mm ROMANTIC ITALIAN looking for commitment. If you've dallied with Cadillac Allante, Mercedes Benz 560SL, or Jaguar XJS and you're ready to commit to a serious new relationship, look me up. I'll be the one with the convertible soft or removable hard top. My availability is limited, so come in for a test drive now. MIDDLETOWN CORPORATE AVIATION, INC.

i (513) 746-9304 AVAILABLE FOR ACQUISITION MANUFACTURING-Communicatiorttiming products proprietary electronic products; sales for fiscal year 1989 exceeds management to remain. HEALTH CARE SERVICESPRODUCTS-Market includes hospitals, nursing homes, private duty home care; excellent growth; sales for 1989 exceeded $2,000,000. BUSINESS OPPORTUNITIES CURRENTLY MARKETING OVER 20 BUSINESSES WITH SALES $1,000,000 IF you HAVE AN INTEREST IN BUYING OR SELLING. CALL Manufacturers Bass Sticker Price 33,550 Year End Clearance Price $27,555 2 le Choose From 1-5 Speed 16 Valve) O.H.C. 1 -Auto Transmission MOBILE COMMUNICATIONS AUTHORUCOOCALtH 12191 Princelon Rd.

(747) CHRYSLER'S TC BUILT BY MASERATI: "That tin base slicker price Title, charges ire extra. mmmmmmm i.