The battle over ICO Inc. is heating up, with a dissatisfied investment group asking Nasdaq to investigate the compounder's voting procedures and asking ICO to produce financial records relating to three residential properties the firm leases in England.
ICO responded Feb. 6 with a letter accusing the Houston investment group, Travis Street Partners LLC, of an "ongoing campaign of false information, innuendo and character assassination."
ICO owns plastics compounders Wedco Inc. and Bayshore Industrial Inc.
Travis Street, which is trying to gain control of ICO to sell it to the highest bidder, sent letters Feb. 2 to Nasdaq and Houston-based ICO making those requests. Travis Street owns 5.11 percent of ICO stock.
In the Nasdaq letter, Travis Street claims ICO executives Al and Sylvia Pacholder, a husband-wife team, have violated Nasdaq rules by retaining voting rights to stock they issued as part of at least eight acquisitions since 1994. Doing so has increased the Pacholders' percentage of voting power within ICO from 12 percent to 31 percent, even though the pair personally own only 1 percent of the company, according to Travis Street.
"Basically, every time ICO made an acquisition, the Pacholders got to vote more," Travis Street managing partner Timothy Gollin said by phone Feb. 8.
Travis Street also has requested records ranging from corporate expense accounts to credit card records concerning the British properties — houses in Northampton and Pattishall and an apartment in London. ICO's British businesses include color concentrate production.
"We just want to know how the company's money is being spent," Gollin said of the records request, which Texas law permits for any 5 percent shareholder in a public firm.
ICO responded in the Feb. 6 letter, signed by Al Pacholder, accusing Travis Street of an "ongoing campaign of false information, innuendo and character assassination to derail our review of strategic alternatives." ICO had hired New York investment firm Bear, Stearns & Co. Inc. to analyze ways to build shareholder value.
ICO's letter claims Travis Street does not have the interest of ICO shareholders in mind. The letter accused Travis Street of "seeking to obtain ICO and its valuable assets at the lowest possible price for your own benefit."
In a brief reply Feb. 7, Travis Street asked Pacholder to specify any untrue comments it has made in its news releases and letters.
ICO management could not be reached for comment Feb. 8. Nasdaq spokesman Scott Peterson confirmed receipt of the Travis Street letter but declined further comment.
Travis Street offered $2.85 per share for ICO on Dec. 20, when ICO stock was trading at less than $2. Since then, its price has climbed to about $2.30. Gollin said Travis Street planned to increase its offer by 20 cents per share for each million dollars of profit improvement ICO showed in the first quarter beyond a $10 million goal the company had set.
However ICO failed to meet that goal, posting pretax earnings of less than $8 million in the first quarter. Gollin said Travis Street "is studying the situation."
ICO posted sales of $325.3 million in its 2000 fiscal year. Petrochemical processing — including compounding, grinding and distribution — accounted for about two-thirds of 2000 sales, with the rest coming from oil-field services.
In compounding, ICO primarily serves as a toll compounder to major resin makers. Its biggest plastics customer is Dow Chemical Co., which accounted for 14 percent of its petrochemical processing sales in 2000.