CORPORATIONS: Sight for Fairbanks, Morse

In the past five years Financier Leopold Dias Silberstein, 52, has swept up 20 companies into his Penn-Texas Corp., sometimes by stock swaps after a tough proxy fight. Last week, driving for his biggest prize of all, Chicago heavy-equipment maker Fairbanks, Morse & Co. (TIME, March 12), Silberstein ran into a brass-knuckled pier 6 brawl. The opposition came not from Fairbanks, Morse but from within Silberstein's own camp. In a New York Federal Court, dissident stockholders demanded an accounting of Silberstein's management.

Worrying the rebels was the fact that the market value of Penn-Texas stock has slumped from this year's high of $19.62 to last week's $12.37. Charged a leader of another dissident group, Attorney Alfons Landa (who is also chairman of the executive committee of Fruehauf Trailer Co., and holder of 1,400 shares of Penn-Texas): "This case is alarmingly similar to Sydney Albert's Bellanca [TIME, Oct. 22]. In Bellanca, Albert had a whole safe full of unissued shares, which he traded for shares of other companies to gain control of them." Answered Silberstein: "We are not another Bellanca, We are very very sound."

Good Deal. Silberstein and friends, said the protesting stockholders in the court complaint, bought 100,000 shares of Fairbanks, Morse for $33 apiece, then sold them to Penn-Texas at $43 for a personal profit of $1,000,000. They further charged that Penn-Texas this year bought 200,000 shares of Fairbanks, Morse at an excessive price ($45), raised the money by borrowing and by selling and leasing back Penn-Texas properties. As a result, they said, banks were threatening to call Penn-Texas loans.

In angry reply, Silberstein denied that he ever acted as middleman in the sale of Fairbanks, Morse stock to his own company. He admitted that Penn-Texas 1) sold off some of its properties and leased them back to raise capital and 2) bought Fairbanks, Morse stock for $45. But he thought both were good deals. Fairbanks, Morse stock now sells for $56, said he, and Penn-Texas is on solid financial ground, is not being pressed by the banks from which it borrowed, had nine-month earnings of $4,813,000.

Family Feud. Seeing these figures, Penn-Texas stockholders at last week's annual meeting slapped down the dissidents, gave Silberstein more ammunition for future swaps by voting to double the company's stock to 10 million shares (of which Silberstein now owns but 20,000). In the flush of victory, Silberstein charged that the revolt in his ranks was a Fairbanks, Morse device to frustrate his designs on their company.