Corporate Raiders Go to Battle Over Horizon

By Raymond Klempin

DATELINE: Houston; TX; US

	The raider gets raided.  That's how the corporate battle over Horizon Corp. is 
shaping up.  Houston investor Charles Hurwitz is facing a two-pronged attack from 
a little New Jersey outfit that might even remind him of his early days. He, too, 
once ran an aggressive investment portfolio.

   Shamrock Associates announced in early October that it meant to take control 
of, and then liquidate, Arizona-based Horizon, which sells and develops real 
estate in Arizona, New Mexico and Texas.  Waterwood, on Lake Livingston north of 
Houston, is a Horizon project.

   And Horizon is a Hurwitz project, so now Hurwitz is in the unfamiliar role of 
building some of those anti-takeover obstacles which he has so successfully 
knocked down when used by others.  Hurwitz has come a long way from his East 
Coast days, with corporate bases in Houston and Los Angeles and subsidiary 
offices in several states.

   Hurwitz took control of Horizon by helping it get over a financial hump.  MCO 
Holdings, another Hurwitz company, poured in equity money and put some spit and 
polish on a badly needed $ 25 million loan.  In exchange for these efforts, 
Horizon put together a package of options allowing MCO to triple its holdings. 
MCO eventually exercised the options to control about 17 percent of the company.

   But Hurwitz controlled more than a percentage of stock.  He controlled the 
board.  It was expanded to allow Hurwitz to seat five representatives, including 
himself, accounting for half the members.  Hurwitz solidified control by naming  
William C. Leone,  president of MCO, to also serve as Horizon's chairman, 
president and chief executive.

   While all this was going on, Shamrock Associates also spied an opportunity on 
Hurwitz's Horizon and started buying stock around the first of this year.  And 
things were peaceful until June 12.

   Horizon announced it had borrowed $ 3 million from MCO and, by all 
appearances, had turned to MCO as a benefactor of last resort.  If last year's 
financial restructuring didn't make it clear, the June borrowing did.  The rosy 
glow over Horizon could be a sunset instead of a sunrise, because Horizon's 10 -- 
K report states with clinical directness that the company's borrowing base was 
tapped out.

   Four things happened when Horizon borrowed from MCO.

   Horizon issued a $ 3 million promissory note convertible into another big 
chunk of Horizon stock at $ 4.25 a share.

   MCO promised to lend yet another $ 3 million this year if Horizon only asked. 
MCO would be given a non-convertible note in return.

   The New York Stock Exchange, where Horizon is traded, took the first steps 
toward delisting the stock because the note was issued without stockholder 
approval.  Horizon appealed, and the stock is still trading pending a hearing.

   Shamrock Associates filed a 13D with the Securities and Exchange Commission in 
which it huffed and puffed that the note could have a depressing effect on a 
stock "already depressed relative to the true value." A 13D filing is required 
when investors acquire more than 5 percent of a company.

   Shamrock also stated it might attempt a takeover of Horizon.

   To preempt that unhappy event, the real estate firm moved first to ground any 
challenge by changing the bylaws, thus, according to Shamrock, handing over 
control to Horizon's board.

   The next step was to require that nomination for directors at the Oct. 18 
annual meeting be filed no later than Sept. 9.

   That was enough to get Shamrock's attention, because it had decided to launch 
a proxy attack, the initial phase of what would become a pincers movement. 
Horizon learned about it in court when Shamrock complained it didn't get a copy 
of the amended bylaws until Aug. 31 and thus had no time to put together a slate 
of 10 directors.  A delaying tactic, perhaps, but it worked.  Horizon generously 
extended the filing date by one week.

   Meanwhile, Horizon had thrown up another anti-takeover hurdle.  Instead of 
issuing a non-convertible note for the additional $ 3 million loan, Horizon 
handed over to MCO 600,000 shares of preferred stock.  Preferred stock doesn't 
always include voting rights, but the Horizon issue did.

   So now Horizon's board had sole power to change the bylaws and MCO had the 
voting power to veto changes sought by stockholders bold enough to propose them.

   Shamrock was getting into the swing of court battles by now, helped no little 
amount by the fact that Shamrock general partner, Natalie I. Koether, is a law 
partner with Koether, Harris & Hoffman in New Jersey.  On Aug. 15, a day after 
terms of the note were amended, Shamrock went to the bar asking that the 
anti-takeover obstacles be toppled.  The court refused.

   Horizon and MCO also went to court in an attempt to keep Shamrock from buying 
more stock and to stop the proxy fight.

   But then Shamrock launched the second half of the pincer movement early this 
month, perhaps fearing the court might strike down the proxy contest before the 
annual meeting.  In any event, it's unusual to use both a proxy fight and a 
tender offer to gain control of a company.

   The tender offer is for a majority of Horizon's stock.  For each share of 
stock tendered by stockholders, Shamrock is paying $ 6 and issuing one share of a 
preferred stock entitling holders to proceeds from the proposed liquidation.

   The tender offer expires Nov. 4.  The annual meeting deciding the election of 
directors was scheduled for last Friday, Oct. 18.  MCO now controls about 33 
percent of Horizon's common and 37 percent of the vote when including the 
preferred stock.  Shamrock holds about 10 percent.  Both sides are awaiting the 
outcome before saying much.


Houston Business Journal                                         
October 21, 1985
SECTION: Vol 15; No 18; Sec 1; pg 1A