OLD DIANA = NEW COYOTE. CHECK OUT THE HISTORY (Boy did Nuko get bought by the right company!!!)
Milwaukee Journal Sentinel Online Main Page
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Former executives sell Diana stock
Roller-coaster ride now taking company to a new state and name
By Kathleen Gallagher
and Avrum D. Lank
of the Journal Sentinel staff
February 20, 1997
Diana Corp. may be leaving town, but some of its value remains.
In the past three months, former Diana Chairman Richard Y. Fisher and former President Donald Runge have sold more than $8 million worth of stock in the
company. And last July, Runge sold $4.2 million more.
Both men are from Milwaukee and founded the company. They were not available for comment Wednesday, but they said earlier that they sold the stock to
diversify their portfolios.
Fisher and Runge both resigned last year from Diana, which is moving its headquarters to Calabasas, Calif., site of its Sattel Communications subsidiary, abandoning
offices on Milwaukee's northwest side.
Once it gets to the Golden State, the company intends to change its name to Sattel.
The move is the latest act in a drama that has seen Diana's stock fall from an intra-day high of $114.25 in May to $10.125 a share Wednesday, when trading was
halted late in the day. Three months before hitting its high, the stock had been trading below $13.
The move also is typical of many in the long stream of complex transactions that make up Diana's history. Rather than stick to one kind of knitting, Diana's top
executives cross-stitched, needle-pointed and seamed together a complex weave of financial maneuvers. None were ever easy to understand.
Diana's history began in 1966 when Fisher, Runge and Sydney B. Lilly started Bankit Corp., a credit card service company. They changed its name to Farm House
Foods Corp. in 1971. By then the company had shifted into the wholesale food distribution business. That was just the beginning of a long line of name changes and
restructurings that made this company nearly impossible to get a handle on.
By 1981, Farm House was the state's third-largest public company, with reported revenue of $1.38 billion. It had a list of ownership affiliations that included Scot
Lad Foods, Casablanca Industries Inc. and Drug Systems Inc.
In one deal, Farm House sold in an initial public offering one-third of Drug Systems Inc., a company it created by combining its subsidiary, White Drug Enterprises,
with Wil-Car Enterprises, a subsidiary of Casablanca. Farm House and Casablanca each got a third of the offering.
By 1985, Scot Lad had been sold to Roundy's Inc., with what remained being re-named F/H Industries Corp., and F/H had changed its name to Diana Corp.
By 1987, Drug Systems Inc. had sold White Drug, bought Pill & Puff Inc. and Economy Dry Goods Inc., and become Retailing Corp. of America. By 1989, Diana
Corp. had become the parent of Farm House and the other companies, and Farm House announced it would not be able to meet payments on $21.1 million worth
of junk bonds.
Farm House, which by then had a negative worth, settled the first of many lawsuits with bond holders for more than $2.8 million in 1990. Meanwhile, Diana, which
argued it was not liable for the Farm House default, was flush with cash and planning to venture into new businesses with its Diana/Europe and American Joint
Venture Trading Corp. subsidiaries that were starting to trade in Eastern Europe and Russia.
By 1991, Retailing Corp. had closed eight Toys for Joy stores, sold Pill & Puff and, with another affiliate, EDG Acquisition Inc., filed for Chapter 11 bankruptcy
protection.
But Diana was on the brink of a move into telecommunications through its Sattel Communications Co. and C&L Communications Inc. subsidiaries.
In 1996, as its stock began to climb, Diana executives announced they would spin off Atlanta Provision Co., Diana's meat and seafood distribution business, and
buy Pittsburgh-based ATI Communications. They called off the ATI deal several months later.
By the end of the year, Diana said it would buy Valley Communications Inc., based in Fremont, Calif., and sell Atlanta Provision after finally finding a buyer rather
than spinning it off.
Much of the rise and fall in Diana's stock during 1996 involved speculation about the viability of a telecommunications switch owned by Sattel.
Supporters of the switch have engaged in a long-running conversation with those who believe it does not have much value. Many of the comments have been
distributed in a chat room in the Motley Fool investment section of America Online.
Last May's rise and some other price spikes on the way down have been attributed to short sellers being squeezed to cover their positions. A short seller borrows
shares and then sells them, hoping to buy back shares at a lower price to return those borrowed. The short seller keeps the difference as profit.
A short squeeze develops when a lot of short sellers are asked to return their borrowed shares and must bid up the price in the market to do so. In that case, they
usually lose money.
As insiders, it would have been illegal for Runge or Fisher to sell short, but they were selling shares as the stock fell.
In early July, Runge sold slightly more than 100,000 shares for a total of about $4.2 million, or an average price around $42 a share, according to filings with the
Securities and Exchange Commission. Then, earlier this month, he sold about 60,000 more shares for a total of about $620,000, or an average of slightly more than
$10 each.
Fisher, meanwhile, told the SEC he sold 100,000 shares in December for $28 each and 300,000 shares in January for $15.50 each, a total of about $7.5 million.
He reported he still held 458,455 shares of Diana, or 8.3% of the outstanding stock after his last transaction.
Runge, who reported in the SEC filing a business address in Zephyr Cove, Nev., said he owned 567,722 shares of Diana, or 10.1% of the stock, after his last
transaction. |
