RPT: AutoInfo, Steel Partners -2: Fund Disagrees With Mgmt
NEW YORK (Dow Jones)--Hedge fund Steel Partners LP sold its 11.5% stake in AutoInfo Inc. (AUTO), saying it disagreed with the consumer finance company's management.
"We voted with our feet," said Steel Partners Chairman Warren G. Lichtenstein, disapproving of the company's foray into subprime lending.
The fund, which had owned 920,700 shares, already had unloaded 212,800 shares between Aug. 8 and Sept. 24, according to a filing with the Securities and Exchange Commission.
Last year, a group including Steel Partners sought and was denied permission from AutoInfo's board to raise their stakes in the company above 15%. Steel Partners, which then held a 14.2% interest in the Fair Lawn, N.J., finance company, said it believed AutoInfo's shares were drastically underpriced. The group wanted AutoInfo to remove its poison pill provision to allow Steel to increase its interest.
Earlier Thursday, AutoInfo shares traded in blocks of 10.1%, 6.6% and 2.8%. The activities sent the shares up 9/23, or 20.9%, at 1 11/16 on volume of 1.8 million shares. That's more than 33 times the 54,000-share daily average on the Nasdaq Stock Market.
AutoInfo officials didn't have any comments.
Steel Partners and other funds bought stakes in AutoInfo after the company sold some assets to Automatic Data Processing Inc. (AUD) in 1995.
Automatic Data, or ADP, provides a service based on its own software, satellite communications and data lines to help insurers and collision-repair shops buy and sell more than 7.5 million parts a year, the company said. But after ADP's acquisition of AutoInfo, its only major competitor in the field, many customers feared ADP had too much power and could easily raise prices, prompting a Federal Trade Commission inquiry.
In June, ADP reached a settlement with the FTC to divest certain assets of its parts services business.
The asset sale, then a key business, gave AutoInfo $35 million in cash that the funds tried to get a piece of, said Neidiger Tucker Bruner analyst Michael E. Shonstrom. The funds also wanted to get more seats on the board, he said.
Since then AutoInfo has acquired several subprime lenders and subprime loans that are packaged together - businesses that Steel Partners didn't agree with.
- Hue Ha
"Dow Jones News Service"
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