The Los Angeles Times from Los Angeles, California • 45

Bankers Exped Prime Rate fo Go Even Higher ew r. Financing Chief Raps Debt of Conglomerates Mmmk nnance jic WEDNESDAY, FEBRUARY 26, 1 969 -Partlll Merger Abuses May Be Hurting Investor Budge i 4 If NEW SEC CHAIRMAN Hamer H. Budge, newly named chairman of the Securities and Exchange Commission, told a House subcommittee Tuesday that tax considerations play a major role in some corporate tion TV stockholders also approved an increase in the authorized common stock to 15 million shares from 5 million. National General Corp. said it has absorbed Great American Holding.

National General, of Los Angeles, recently said it owned 93 of the holding company of Great American Insurance Co. National General said each Great American Holding shareholder (other than National General) will be entitled to ZVt National General warrants for each Great American Holding share surrendered. Each warrant is for purchase of one National General common share at $40, until Sept. 30, 1978. A court action was brought by minority stockholders of the New York-based insurance company earlier this month, charging that National General ordered an excessive dividend payment from Great American Insurance Co.

in order to reduce the insurance company to a tax loss for National General. Northrop joined in North American Rockwell's bid for the F-15 job. North American Rockwell, El Segundo, said Northrop of Beverly Hills, will join North American's bid for development and production of the new air fighter, designated the FX. Both firms will participate in design and manufacturing if North American wins the contract in competition with two other firms: Fairchild-Hiller Corp. and McDonnell Douglas.

The definition phase, now under way, will provide refined design, funding and production data for the Air Force to use in selecting the company to design and build the new aircraft. Briefly Told Hammond Corp. said its fiscal 1969 profits will be "satisfactorily above" the $1.26 per share earned in 1968 Bank of California predicted 1969 earnings will pass the $3.70 per share record of 1968. Congress gave final approval to a bill allowing more public stockholder representation on the board of Communications Satellite Corp. Shareholders of Argonaut Insurance Menlo Park approved their merger into Teledyne Los Angeles National Video Corp.

will file a plea for bankruptcy un-' der Chapter 10 of the federal reorganization provisions Liqui-donics Industries will buy 1,674,900 shares of UMC Industries through its tender offer, bringing its holdings to more than 50 Parvin-Dohrmann completed previously-announced acquisition of the Stardust hotel and casino in Las Vegas Crane Co. directors proposed increasing authorized shares to 10 million from 5 million Revere Copper Brass directors approved authorization of up to 1 million new preferred shares Schick Electric shareholders authorized increasing common stock to 5 million shares from 2 million, and a new issue of 3 million preferred shares The SEC authorized Columbia Gas System to sell to banks up to $100 million in unsecured notes, to finance mergers. At left is hrancis M. Wheat, also a member ot the agency- Warner Board Approves Kinney Bid but Commonwealth Not Out BY RON S. HEINZEL Timw Staff Writer Wirephoto courts ruled then that moviemaking companies must sever their U.S.

theater operations from the business of producing and distributing motion pictures. Commonwealth United of Beverly Hills, among other things, produces and distributes motion pictures for theaters and television. Warners' board Tuesday said "it appears the Commonwealth proposal raises serious and substantial questions under the antitrust laws and that there is a substantial likelihood that action will be taken by the Department of Justice to seek to enjoin consummation of that (Commonwealth) offer." Warner attorneys indicated there would be no such antitrust questions raised in the Kinney proposal. "In the circumstances," the board Please Turn to Page 16, Col. 1 National News Tho fudge reaffirmed his ruling en the Gulf chemical firm tale.

Federal Judge Bernard Decker stood by the ruling he made Monday that he will issue his decision Thursday on the plea of Northwest 'Industries Inc. for a preliminary iniunction to prevent B. F. Good rich Co. from issuing 700,000 shares to Gulf Oil Corp.

He has issued a temporary order to block the transaction, in which Gulf would sell its half interest in Goodrich-Gulf Chemical Inc. to B. F. Goodrich Co. Northwest, which has proposed a $1-billion tender offer for Goodrich, tried to persuade the judge to speed up his decision.

Attorneys said a delay would prevent Gulf from voting the shares at the annual meeting March 25. RCA announced its entry into the U.S. large-scale computer market. RCA said its new Spectra 70-60 computer is designed to handle large information processing needs of corporate and governmental data centers. The new system is more than three times faster than the RCA medium-scale 70-45 computer, the company said.

Shipments of the new model the seventh in the Spectra 70 line will begin in the second half of 1970. Retail prices will start at $17,000 per month. Sharon Steel admitted defeat in yielding to NVF takeover. The steel maker said it is giving up its legal battle against NVF Co. of Wilmington, and will accede to that firm's control.

NVF offered a package of debentures valued at about $115 million, plus warrants, for the Sharon stock. Sharon said the transfer of control is being planned for Its board meeting Thursday. Sharon said NVF extended its exchange offer to Sharon stockholders until next Monday. It originally expired 21. Sharon had sought a court order to block the NVF bid and a hearing on the case had been put off until Tuesday.

Atlantic Richfield increased its Alaskan crude oil price 5 cents. The company added the nickel per barrel to its posted purchase prices for Alaskan crude oil, retroactive to Feb. 1. Separate prices are posted for oil at the point of entry into pipeline facilities on the Western and Eastern sides of Cook Inlet. West side prices ranged from $2.37 per barrel for 28-degree gravity crude to $2.97 for 40-degree.

East side prices ranged from $2.48 to $3.08 on a corresponding scale. Mobil Oil said it is studying its prices after others raised theirs. An intensive price study has been carried on by Mobil Oil Corp. for some time, the company said, to gauge the effect of steadily rising costs. But the company said it would not comment on the price boosts by Texaco Inc.

and Phillips Petroleum Co. until it had completed its analysis. Phillip's said it is suggesting an increase in retail prices of 1 cent per gallon by dealers, providing 0.3 cent for the dealer and 0.25 cent for jobbers. It said it was increasing its gasoline prices to dealers by 0.7 cent per gallon and ending all temporary price supports. Texaco increased its wholesale prices by 0.6 5rent per gallon.

iAn Atlanta broker was suspended by th SEC for federal violations. j. Over-the-counter trading activities of Rankin Co. were suspended for 30 days, except for customers' unsolicited orders to sell from existing positions, and orders in municipal securities. The sanctions reflect acceptance of a settlement ioffer following SEC staff allegations of violation of federal securities laws Involving the offer, sale and delivery of 'securities of Lynbar Mining Ltd.

Men at the Top Rudolph A. Peterson was elected to the Comsat board of directors. Peterson, president of the Bank of Ainerica, succeeds David M. the Chicago banker who resigned to become secretary of the Treasury. Peterson will serve on the Communications' Satellite Corp.

board until the annual stockholders meeting May 13, when he will be nominated for a full one-year term. California Subscription TV holders approved the acquisition of Leach Corp. The New York-based firm's shareholders approved a previously announced transaction to buy Leach a closely-held San Diego manufacturer of electronic parts for the aerospace industry. The transaction is for 3,991,935 shares of Subscription TV common, stock, worth about $40 million. Subscrip- BY ARELO SEDERBERG Times SMI Writw NEW YORK Consumers are going to pay more to borrow money very soon, despite the fact that interest rates already are at record highs.

It may be only small satisfaction to the heavily burdened individual, but chances are that General Motors and American Telephone and Telegraph are going to have to pay more, too. New York bankers, economists and money market analysts agreed in a spot check that the banking industry's prime rate, already a record 7, probably will rise to 7 14 or even to before the current squeeze on credit is over. The prime rate is the best rate banks offer for their most creditworthy customers, usually large corporations. Other interest rates are still up from the prime. Running Short of Funds Loan demand from corporations, bankers explained, is so heavy that banks are running short of funds.

Many already have liquidated bond holdings and have begun to limit loans. Banks' inflow through deposits has been crimped, meanwhile, by a deliberate policy of the Federal Reserve Board, which through its various mechanisms is attempting to hold down bank lending to cut into the nation's inflation-generating boom. Sidney Homer, partner in the Wall Street bond house of Salomon Bros. Hutzler and an authority on bonds and interest rates, said in an interview: "Our basic assumption is that the Federal Reserve Board will remain restrictive. It will press down on the banking system until banks begin to turn away loans." Translation: higher interest rates are due, because lendable funds will be in even shorter supply.

Expects Rise to 7Vi Homer anticipates a rise to 7V in the prime rate, possibly in two steps of 14 each. In this assessment, he has strong support among his peers, although not every one interviewed would arbitrarily forecast a 7V rate soon. "I don't see any let up (by the FRB) this year," said Elbert P. Sommers, vice president and director of Economic Research for the National Industrial Conference Board. "A rise in both the.

prime rate and the discount rate is probable." The discount rate, set by the Federal Reserve Board, is the rate charged by the Fed when member banks borrow from the system. "If you don't see a rise in the prime rate, there will be restrictions by banks, such as giving fewer and fewer companies the prime rate," says Lawrence Kahn, vice president of National Securities Research Corp. "But I'm sure that interest rates will move up, at least to some degree." Please Turn to Page 1.1, Col. 1 Haack Urges Long Range Planning fo Meet Volume Surge NEW YORK Wl The paper work jam in brokerage back offices highlights the "urgent need for imaginative long-range planning" by the securities industry, said Robert W. Haack, New York Stock Exchange president, in the exchange's annual report.

Haack said the paper work problem generated by heavy trading volume underlined the need "to be prepared to meet future problems on a planned rather than a make-do basis." Testimony Due Today Haack was due to testify today before a House commerce subcommittee on the paper work problem. In his message to members in the exchange's 1968 annual report, Haack said average daily volume in 1968 was just under 13 million shares. "Much of the industry," he said, "was not adequately prepared to handle the surge of additional business. And experience indicates that brokerage firms which have given little or no attention to long-range planning are, in general, the ones most seriously affected by the widely publicized paper work problem." Haack said projections for the future indicated average daily vo-i lume on the exchange could hit a high of 23 million shares in 1975 and 36 million shares in 1980. Haack said the exchange itself was taking a hard look at the future through a Long Range Planning Committee.

The committee, composed of top level executives, aimed to "identify and anticipate future needs and problems, and to develop and supervise implementation of appropriate policies', studies and programs for dealing with them." BY ROBERT DALLOS TtoMt Staff Writtr WASHINGTON Hamer Budge, on his fourth day as chair-, man of the Securities and Exchange Commission, Tuesday strongly critl-: cized the "financial abuses" of; corporate raiders in arranging fin-' ancing of conglomerate mergers and; said they may be hurting investors' interests. "Those who are engineering the' present wave of takeovers," Budge said, "appear to find the short-run- rofits so tempting that they ignore; ong-term risks." The new chairman, appointed by President Nixon Saturday to replace-Manuel F. Cohen, made his debut as the chief regulator of the securities industry at the opening of hearings by a House commerce subcommittee studying stock market problems. Tax Considerations Cited He said that tax considerations play a major role in some conglomerate acquisitions and that debt financing often is used by owS corporation to take over another. "One reason for the increasing use -of debt financing," he added, "may be the fact that tax laws appear to: encourage this method of financing; takeovers.

I am fully aware that the: problem of closing possible tax loopholes is an intricate one. theless we cannot help but note the extent to which tax considerations, affect the techniques of corporate combinations." He listed the trend toward con-, glomerates as one of the problems receiving intensive study by his agency. Other areas receiving close scrutiny include the "tremendous increase" in trading on the nation's exchanges and on the over-the-counter market with the resulting-paperwork logjam and the rise in speculative activity on Wall Budge, who has been a member of the commission since 1964, said in-an interview that his testimony was a "commission product," adding that: he had "put it together" and "wrote certain portions." Some Democrats in Congress had asserted over the weekend that Cohen was pushed into resigning by the Nixon Administration to pre; vent his testimony. "I know Mr. Cohen had not.

completed his statement," Budge said. "The testimony was in the process of being prepared (when I was appointed). I have no way of knowing if Mr. Cohen's testimony would have been different." Nevertheless, the fact that the' testimony might have been pre- Please Turn to Page 9, Col. E.

STEIGER Writar negotiations are continuing with an unnamed other concern looking toward a merger with Filtrol. But he said there have been no new developments in the talks. The other concern has been identified only as being listed on the New York Stock Exchange. Slick, a diversified concern listed on the American Stock Exchange makes specialty chemicals and food products. It wants to exchange one share of a new convertible preferred stock for each of Filtrol's 2,622,544 shares outstanding.

Based on th Slick preferred's convertibility into two shares of Slick common, the offer hasa current market value of up to $126 million. they can tell someone to move with no reason," says Norman Lund-strom, president of the league, which is based in Garden Grove. (Except where there's a lease involved, landlords can evict a tenant on 30 days notice. But, of course, a tenant can up and leave on the same notice.) 't Dennis Kavanagh, a San Francisco lawyer who became legislative advocate for the league Jan. 1, says the league hasn't proposed any legislation yet.

But he suggests some effort may be made to get trade associations representing manufacturers, dealers and park owners to try to regulate the situation. Barring that, a legislative program may be deve-. loped. i Neil Nordlander, executive director of the Western Mobilehome in Riverside, takes issue with the league's allegations. Nordlander, whose group represents park owners and operators and others allied Please Turn to Pago 11, Col.

2 Warner Arts which has been courted by Kinney National Service Inc. and Commonwealth United Tuesday accepted a proposal from Kinney. But Commonwealth still has marriage in mind. Directors of the Toronto-based film company, acting on a recommendation of a committee appointed by the board to consider offers, unanimously adopted a resolution authorizing an agreement for shareholder consideration of the combination of Warners and Kinney. Allen financial advisers to Warner suggested the board support the transaction and "do what it can to further it." To Dispose of Agency Commonwealth's tender offer requires no board action, the directors said.

The board said its recommendation to shareholders will be made when there is an effective prospectus of proxy material which has been cleared with the Securities Exchange Commission. Key to the decision to back Kinney's offer apparently is an agreement by Kinney of New York to dispose of its talent agency in the immediate future. The Warner board said that "under no circumstances would it regard with favor any proposal which would involve any material question of intervention by the Justice Department." Warners earlier had agreed to be acquired by National General Corp. of Los Angeles, but terminated negotiations Jan. 20 after indications by the Justice Department that it would oppose the merger.

National General produces motion pictures and owns a string of theaters. Warners produces movies and television films National General Warners deal wa3 terminated before a U.S. district court decided whether to approve the transaction. Court approval was necessary because of antitrust consent decrees several years ago. The Slick Claims 45 of Shares but Filtrol Expresses Doubt NEW PRESSURE GROUP IN STATE As Mobile Home Lots Dwindle, Gripes Grow BY PAUL Timat New York-based Slick Corp.

Tuesday said that it has obtained more than 45 of the outstanding stock of Filtrol Corp. through its tender offer. The offer, which has been vehemently opposed by Filtrol management, expires March 7. Myron C. Bantrell, Filtrol's 77-year-old chairman and chief executive, said he was suspicious of Slick's claim and would believe it only when he is notified officially.

Bantrell added he has asked the Securities and Exchange Commission to inform him if Slick files notice with the commission declaring its ownership of Filtrol stock. Meanwhile, Bantrell noted that words, these disgruntled owners say the landlords evict simply to get the space to "sell" to someone else. Other gripes include the frequency of rent increases. One homeowner in Southern California insists 200 couples moved into a new park with the promise their monthly rent would stay at $70 per lot for three years. Once the park was filled, however, she reports, the rent was boosted $3 and then $5 more less than a year later.

Those who objected were told there was a waiting list for spaces. some cases, rents have increased even more sharply, mobile home owners complain. One individual reports a 25 increase within 11 months of moving in, despite promises there would be no change. Still another gripe is that an occasional park manager or owner is insisting on cutting himself in when a mobile home owner goes to sell his home in a park. Unless the landlord gets a part of the selling, price, he threatens to evict the home.

Wfi feel It's absolutely wrong that Stiff 104 103 102 101 100 99 98 IB) 12 11 10 I MIUIONI 117 124 131 27 214 221 228 1 WEEKS ENOINO NEW YORK-Stcwdard Poor's -500-itock index closed at 97.98, down 0.62. High during the doy was 99.65; the low, 97.50. The industrials closed at 1 06.36, down 0.62; the rails at 51.97, down 0.76; the utilities at 67.28, down 0.66. The "500" 1968-69 high cf 108.37 was it Nov. 29.

The 1968-69 low of 87.72 was set March 5. Volume declined to 12,320,000 shores, compared to 1 2,730,000. OVER-THE-COUNTER The National Quotation Bureau Index of 35 Industrial stocks closed at 395.78, down 2.95. The 1968-69 high of 433.41 was set Dec. 17.

The 1968-69 low of 321 .51 was set March 6. LONDON The Financial Times Index of 30 industrial stocks closed at 478.6, up 3.3. The 1968-69 high of 521.9 was set Sept. 19. The 1968-69 low of 385.0 was set Jan.

2, 1968 BY JOHN F. LAWRENCE Tlmas Financial ESItar To the many voices in Sacramento, add yet another the six-year-old Golden State Mobilehome Owners League. It already has 17,000 members and a good many gripes to bring to the ears of the state Legislature. Most of them stem from the fact that while most people own their mobile home, they only rent the Bpace to put it on. The league charges that a few (and the league stresses it's only a few) mobile home park managers misuse their status as landlords to evict mobile home owners, homes and all, without cause.

What's behind these evictions? Some home owners insist it reflects a severe shortage of vacant space for the rapidly growing number of mobile homes and the ability of the landlord to pick up a gratuity from a dealer selling new mobile homes or an owner In quest of space. In other i.