An institutional investor is demanding that AirNet Systems Inc. of Columbus, Ohio, stop trying to diversify out of the check courier business — and that it oust its chief executive, who has led the diversification effort.
Pacific Coast Investment Partners LLC of San Diego, which owns about 4% of AirNet’s outstanding stock, said Thursday in a press release that it might seek to unseat AirNet’s board unless it fires the CEO, Joel E. Biggerstaff.
AirNet, seeing the handwriting on the wall about the future of paper checks, also offers charter passenger services and non-check cargo, such as organs for transplantation and perishable pharmaceuticals. In January it hired a financial adviser to evaluate its alternatives, including a sale.
The company is already facing the loss of one regular delivery route. Clearing House Payments Co. plans to shut down its nightly west-to-east check-clearing flights in May.
But James M. Chadwick, a managing member of Pacific Coast, said in an interview Thursday that AirNet should not be wasting energy on diversification.
“There’s going to be a need to transport physical checks for quite some time, in my opinion,” Mr. Chadwick said.
Many banks lack the resources to shift their check processing systems to images, he said, so AirNet’s volume “may decrease in the future, but it’s not just going to go away.”
He accused Mr. Biggerstaff of mismanaging the business.
AirNet’s stock price has dropped 50% since he took charge, Mr. Chadwick noted. The stock, which peaked at close to $30 in 1998, was near $10 in August 1999, when Mr. Biggerstaff joined the company. It closed Thursday at $4.48.
Pacific Coast has acquired 450,000 AirNet shares since January at prices between $3.50 and $4.50, Mr. Chadwick said. He said Mr. Biggerstaff, who is also chairman and president, has never taken a significant ownership stake.
An AirNet spokesman declined Thursday to discuss Pacific Coast’s demands.
David P. Campbell of the investment firm Thompson Davis & Co. in Richmond, Va., said he doubts that Pacific Coast would follow through on its threat of a boardroom fight.
“I imagine they’ll bail out if the stock goes up and forget the whole thing,” he said.
He also spoke with approval of AirNet’s diversification efforts.
“Those new businesses they’ve been getting into haven’t done that well, but they had a good fourth quarter,” and the diversification plan was showing encouraging signs, Mr. Campbell said.
“There’s a lot of leverage if they can get the express [non-check cargo] business running right,” he said. “They did it for the first time in the fourth quarter.”
The fourth quarter, on which AirNet reported this month, was one of its best in years, Mr. Campbell said. Revenue grew 29% from a year earlier, to $48.4 million, and pretax operating income 79%, to $2.3 million. Bank services revenue was up, Mr. Campbell noted.
Because of a $5.7 million charge to write down deferred tax assets, AirNet reported a net loss of $4.2 million, or 41 cents a share. (It had net income of $712,000, or 7 cents a share, a year earlier.)
The company also took a big charge in the third quarter — $47 million before taxes, three times its last three years’ profit — to write down assets in anticipation of lower check volume.
