TECUMSEH - The Herrick Foundation, controlled by the family which had run Tecumseh Products Co. until about a year ago, has opened what appears to be a new battle over the Michigan company.
The foundation on Monday asked the compressor firm to explore a sale, to eliminate protections against takeovers, and make other changes that would allow the foundation to liquidate its stock in the company.
The Fortune 1,000 company said in a letter back to the group yesterday that it will "appropriately consider" the request. But Chief Executive Edwin Buker told the foundation that "neither the foundation nor any of its representatives or affiliates has been authorized by Tecumseh to pursue a sale of, or any other transaction, involving Tecumseh."
The foundation request was filed by former company chairman Todd Herrick and his sister, Toni Herrick. Mr. Herrick and others he represents own nearly 2.2 million shares, or 43 percent of the company's Class B voting stock, while Ms. Herrick owns 888,100 shares or 17.5 percent. Mr. Herrick, the grandson of the company founder, is one of three trustees of the foundation.
The foundation hired investment banking firm Beringea LLC to review and evaluate how the non-profit and related family trusts can liquidate holdings in Tecumseh, whose stock closed yesterday up $3.93 a share, or 18 percent, at $25.59 on the Nasdaq.
To accomplish that, it asked the Tecumseh board to form a committee to explore a possible sale of the firm, which has struggled in the past two years and had an overhaul of its leadership about a year ago. The foundation wants to approach potential buyers regarding its shares.
The Herricks had controlled the company for years until 2007, when Mr. Herrick was fired as chairman and CEO. At the time, board members blamed management for running the firm poorly, cheap foreign imports, and other issues for Tecumseh losing $80 million in 2006 when it had $1.8 billion in revenues.
The firm's 2007 finances haven't been released. The company this week filed with the U.S. Securities and Exchange Commission its program for long-term incentive plans and severance compensation for executives.