Developer Drops Bid to Take Over Progressive S

An Anaheim developer who has been trying for two years to buy $525.5-million Progressive Savings & Loan Assn. instead will let a New York investor take control of the institution under a new agreement revealed Thursday.

The agreement, which still must be approved by state and federal regulators, is aimed at settling competing bids for Alhambra-based Progressive, which has posted $9.4 million in red ink over the last two years.

Developer James A. Carter, who already had won regulatory approval to take control of the S&L;, reached agreement with Progressive’s board last fall to buy the association for $1.50 a share, or about $6.4 million. The agreement called for the commercial developer to pump another $9 million into the S&L;’s capital base.

But Carter’s offer was topped this spring when Van Greenfield and his Wall Street investment firm, Greenfield Partners, offered to purchase $10 million worth of new stock at $1.75 a share to take control of the institution. Greenfield said his bid would “allow shareholders to participate in the future of the company.”

Progressive took the Greenfield offer to heart, said James E. Hennis, the S&L;’s chairman, because “it’s better than selling out at fire sale prices to Carter.” Watering down existing shareholders’ equity by issuing 10 million new shares to Greenfield was not a barrier, he said, because “a recapitalized company provides a better value to stockholders, even though they get a smaller piece of the pie.

The S&L;’s board had decided two months ago to recommend both plans to the S&L;’s 1,000 shareholders and let them decide, but in the ensuing weeks Carter won regulatory approval of his plan and hinted that he would exercise a contract clause that would let him match Greenfield’s bid.

Carter could not be reached for comment Thursday. But his attorney, Gordon Bava of Los Angeles, said the developer is “happy the fight is over” and believes the new agreement is in his best interest and the best interests of Progressive’s shareholders.

Under the new deal, Greenfield’s bid will be recommended for shareholder approval at a meeting to be held sometime next month. Carter’s bid will remain on the table in case regulators reject Greenfield’s application to take control, or in case the transaction isn’t completed by Jan. 31.

In return, Carter’s takeover expenses--estimated at $400,000 by Bava--will be paid by Greenfield and Progressive in the form of new stock at $1.75 a share. If regulators and shareholders approve the Greenfield deal, Greenfield would own 60% of the stock, would become chairman and would select four other directors. The current directors would resign and elect four of their own to the board.

Carter, who would own 2.2% of the stock, would not join the board. Bava said his client likely will look for other opportunities to buy or invest in an S&L.;