Monday, March 24, 2008

GenCorp settlement

Defense contractor GenCorp now appears to be headed to an uneventful annual meeting this week (Wednesday) after reaching an agreement with Steel Partners, the hedge fund that controls 14% of its equity.

As part of the settlement, GenCorp's president and chief executive, Terry Hall, has stepped down. The interim CEO is J. Scott Neish, and efforts to recruit a permanent replacement for Hall are underway.

Also, three new directors recommended by Steel Partners will take seats on the 8-member board of directors.

The parties apparently reached this agreement on March 5, but didn't announce it until the 17th. In the first two trading days after the announcement, GenCorp's stock price rose markedly. But in the following two days the price slide back to the pre-announcement level. The lesson, I suppose, is that although investors were happy with the resolution, broader market turmoil overwhelmed that narrow-gauge sort of happiness.

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