Panic, Facing Seeming Proxy Battle Loss, Looks to Future
Milan Panic didn’t seem like a man under attack last week at the annual meeting of ICN Pharmaceuticals Inc., the Costa Mesa-based drug maker he founded more than 40 years ago.
Instead, ICN’s chairman and chief executive exhibited only flashes of his legendary combativeness as he stood at a podium, looking worldly backed by flags and photos of ICN’s global operations.
Panic also appeared accepting of an apparent proxy battle victory by dissident investors looking to overhaul ICN’s board and speed a breakup of the company.
“We grossly underrated them,” Panic said of the dissidents. “That’s the reason for our failing. We give them credit. They put up a vigorous fight.”
But the 71-year-old Panic’s graciousness shifted in an interview after the meeting as he challenged the expected new directors: “Let’s hope they make a contribution,” he said.
Panic has been embroiled in a bruising row with a small but vocal group of institutional shareholders. In the week leading up to the shareholder vote, ICN took out newspaper ads questioning the qualifications of the dissidents and their nominees.
But Panic, a Serbian immigrant and former Yugoslavian prime minister, remained unflappable even after preliminary results showed the insurgents’ three-director slate handily defeating a group of Panic-backed candidates.
Despite his rumored hot temper, Panic exuded the continental charm he’s also known for during the meeting and later in a private session with several journalists and a phalanx of ICN officials.
During that meeting, Panic mentioned that ICN is on the verge of “a major acquisition” of a product, but declined to give details. He also talked calmly about the dissident shareholders’ apparent victory in the proxy battle.
Panic did take exception to a question about a federal lawsuit ICN filed alleging that the insurgent directorial candidates and their backers filed misleading proxy statements with the Securities and Exchange Commission.
“You see the characters, you judge yourself. Write something nice for a change,” Panic chastened a reporter, adding “my character is to attack.”
Panic, who fought in the Nazi resistance as a teen, said he sees himself moving into an “an honorary guy” position in a post-breakup ICN. Still, Panic was quick to say he plans to remain active.
ICN “is my life,” he said. “I will have influence through the ownership of stock. In an honorary position, you can do a lot if you’re concerned.”
Panic said he intends to keep a hand in the company he founded in his garage with $200 for his family’s sake.
“I’m not going to die poor,” he said.
Final results of the ICN board election won’t be known for another two to three weeks, according to David Watt, the company’s general counsel. Voting didn’t close until several hours after the shareholders’ meeting was concluded.
Special Situations Partners Inc., a European investment firm, and Providence Capital Inc., a New York investment bank, are the dissidents’ leaders. They contend that Panic and ICN management are moving too slowly on a plan announced last fall to split ICN into three companies: Ribapharm Inc., ICN International and ICN Americas.
The restructuring plan would leave ICN in firm control of Ribapharm, a biotechnology research unit and drug business viewed as a jewel by analysts. Ribapharm, which is set to be spun off in September and will take with it ribavirin, a hepatitis C pharmaceutical that generated $155 million in royalties last year and a good portion of ICN’s profits.
While ICN is set to hold an 80% stake in Ribapharm, Panic doesn’t plan to have a role in the new company. He’s slated to be chairman and chief executive of ICN International and non-executive chairman of ICN Americas.
As for the ICN director seats, insurgents backed Ronald Fogleman, a former U.S. Air Force chief of staff, Edward Burkhardt, former chairman and chief executive of Wisconsin Central Transportation Co. and Steven Lee, chairman of Woburn, Mass.-based PolyMedica Corp. The dissidents have indicated they would back another three-director slate in 2002.
Fogleman, Burkhart and Lee ran against a slate of management-backed director candidates including former Canadian prime minister Kim Campbell, Ray Irani, chief executive of Los Angeles-based Occidental Petroleum Corp. and Charles Manatt, a former U.S. ambassador and Democratic Party powerbroker. Panic is a major Democratic backer.
“If the vote is correct, we’re gratified,” said Eric Knight, Special Situations Partners’ managing director.
If the dissident slate’s win is confirmed, the new directors “will work with the board (to make sure) that ICN carries through with its promises” and carries on the distribution of Ribapharm, Knight said. Proxy fights have shadowed Panic and ICN in the past.
In 1998 and 1999, disgruntled shareholders unsuccessfully took aim at Panic with resolutions requiring mandatory retirement at the age of 70. Those proposals each gained around 33% of shareholders’ votes in those years.
ICN’s meeting drew a crowd of about 150 people, including employees, institutional investors and a brace of senior citizens. Few asked questions, but one query brought out the fighting side of Panic, who was nattily dressed in a dark suit and red tie.
William Nasgovitz, co-portfolio manager of the Heartland Value Fund, a Milwaukee-based institutional investor, said it was “disconcerting to see” that three ICN directors owned no stock while the three nominees from Special Situations Partners held approximately 276,000 shares of ICN stock.
“My objective is to get directors who will challenge me,” Panic said, raising his voice. “If you say we should only have millionaires on the board, I do not agree.
“We do not agree on many things, but I still respect you,” Panic told Nasgovitz, whose group led the unsuccessful mandatory retirement bid.
Other than Nasgovitz, questions mostly came from so-called “friendly” shareholders, including an older man who wanted to know if ICN was developing a drug to stop smoking.
“Heh, heh, heh,” Panic laughed. “We have worked at one time on developing (an anti-smoking drug), but we stopped in favor of antiviral. I wish we had one.” n
