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Non-Tech : Cendant Corporation (NYSE:CD) -- Ignore unavailable to you. Want to Upgrade?

To: BostonView who wrote (1357)	7/29/1998 2:09:00 PM
From: Roy F	Respond to of 3627

Cendant shrs rise in wake of board exodus July 29, 1998 01:48 PM NEW YORK, July 29 (Reuters) - Cendant Corp.'s boardroom purge, including the exit of Chairman Walter Forbes, lifted Cendant stock in very active trade Wednesday as investors hoped the changes would speed the company's recovery from an accounting scandal at CUC International. The resignation of Forbes, and the nine Cendant directors who were previously affiliated with CUC before it merged last December with HFS Inc., resigned effective immediately. In afternoon New York Stock Exchange trade, Cendant shares were up 6.62 percent, or 1-1/8, to 18-1/8. After the market close Tuesday, Cendant said Forbes will be replaced by Henry Silverman, Cendant chief executive and president. Silverman was chairman of HFS Inc. when it merged with CUC in an $11 billion, stock swap deal creating Cendant, while Forbes was CUC chairman. Forbes maintains he had no knowledge of the CUC accounting improprieties until they were uncovered by the company earlier this year. Under the merger agreement, Forbes and Silverman were to swap positions, effective Jan. 1, 2000. One other board member formerly associated with CUC will leave the board by year end, leaving Cendant with 18 directors, the company said. "It was overdue and it was fully expected. The real surprising thing was that it had not happened earlier. Forbes had the nerve to stick around as long as he did. He is as culpable for not knowing as he is if he did know," said an arbitrageur who declined to be named. Arbs, traders who specialize in takeover stock, have an interest in Cendant due to the company's pending $3.1 billion acquisition of American Bankers Insurance Group Inc. ABI , under terms that will give American Bankers shareholders $67 per share in cash and Cendant stock. "It is a positive for the deal. Florida (insurance regulators) was not going to approve the deal with Forbes still in place, and this eases the regulatory approval process somewhat," the arb said. American Bankers shares added 1-3/16 to 60-1/16 on the Big Board. Karen Ficker, a managing director and analyst at ING Barings Furman Selz, said: "We're relieved to see that two of the major issues clouding the stock have been removed so people can begin to focus on fundamentals. You look at fundamentals and clearly the stock is trading at a substantial discount to where it should be trading, not just where it historically traded." Ficker said she has a 12-month price target in low 30s per share. Days before the accounting problems were first announced in April, Cendant shares had hit an all-time high 41-11/16. "There is limited downside with much of the uncertainty having been removed," Ficker added. At the Cendant board meeting yesterday, representatives from Arthur Andersen and Deloitte & Touche made three hours of presentations detailing $500 million in accounting deception, and $200 million in errors over the past three years at CUC, a membership-based consumer services company. The accounting improprieties were uncovered at CUC earlier this year, and were first announced in April. Cendant is a marketing and franchising giant, with a portfolio of brands that range from Century 21 real estate brokerages and Days Inn motels to the Welcome Wagon and PHH Corp., a provider of home mortgages and vehicle fleet management. Although the accounting irregularities were first announced in April, the company announced on July 14 that the initial findings of an investigation into CUC's accounting found the problems to be worse than previously expected, calling them "widespread and systematic." On that day, the company's stock hit an all-time low of $14 per share. The accounting probe's findings so far are expected to result in a reduction of Cendant's 1997 net income, before merger-related and one-time charges, of 22 cents to 28 cents per share, nearly double the previously expected impact announced in April. Also, Forbes' severance package is expected to cut Cendant's third quarter results by $0.03 per share. Cendant reported 1997 income of $1.00 per share before one-time charges. ((--Brendan Intindola, N.Y. Equities, 212-859-1734)) REUTERS