Hit the Road, Daddy

U-HAUL's founder never imagined his own kids would be the corporate raiders of his great American dream

LAST JULY 17, L.S. and six of his kids agreed in writing to hire a New York investment firm to see how they could get the most money for their Amerco stock. Some, like Doc Sam, primarily were interested in selling U-Haul. "My opinion at the time was, and still is, that the sensible thing to do is to sell the company," Sam says. "It's unnatural to take eleven or twelve siblings and tether them all financially, let them fight and argue about it for the rest of their lives."

L.S., as usual, was flip-flopping. One day he'd say he wanted to run the company again, and the next day he'd say he wanted to sell out. But Katrina says she didn't sign on with the L.S. Group intending to sell U-Haul or to boot out Joe.

"I wasn't joining any camp, believe me," she says. "Look, I was independent and thinking for myself. I had just graduated from college, I was looking into a future, and I told myself, what would it hurt if I know what this company was worth, if I know what my options are, whether I want to possibly sell some of my stock, or if I want to disengage from this weirdness before it's too late. What happened was Joe was paranoid and they responded to the worst-case scenario--hostile takeover."

Katrina's sister, Sophia, wasn't interested in selling her stock either, but she stayed in Joe's corner. "What am I going to do with all that money?" Sophia said during a deposition late last year. "I'm not interested in selling. I don't want $10 million. I'm having a tough time dealing with the million dollars I have. I have a financial adviser, a lawyer, and I'm still afraid it's going to disintegrate."

Soon after the L.S. Group signed their agreement on July 17, they flew to New York for a meeting with the investment firm of Bear, Stearns. They weren't exactly covering their tracks, but neither would they tell the Joe Group what was up. Joe and the rest of U-Haul management feared the worst.

"They were in the process of pandering the company on Wall Street," Paul testified last August. "Sam Shoen and Mary Anna Shoen-Eaton have expressed definitively that they were not interested in liquidating just their shareholdings. They were interested in liquidating the entire corporation."

When he heard about the New York City meetings, Joe was "screaming like a bishop cornered by Satan," says L.S. Group attorney Marvin Johnson.

U-Haul management may have been in a tizzy, but it didn't panic. During emergency sessions on the evenings of July 24 and 25, the board of directors voted to sell 8,099 new shares of Amerco stock to five U-Haul executives at a price of $2,715 per share.

The purpose of the midnight madness was to "change the math," Paul admits. With the new 8,099 shares, the Joe Group now had 50.1. percent of Amerco's stock.

The Joe Group also made several other critical changes. Its members signed a voting trust designed to keep them united, and they could only sell their stock back to the company, at whatever price the company offers. Members of the L.S. Group maintain the company-listed price of $2,715 per share is less than a quarter of its true value. Maybe so. But court records also indicate that L.S. never paid more than $915 a share for stock before he was forced out in 1986.

The five key U-Haul executives didn't have the $162,000 each needed as a down payment for their stock. Joe provided the money, taking about $800,000 from the trust accounts of his two children, for whom he is the conservator. (As of last December, Joe testified he had returned about a quarter of the money, at 9 percent interest, to his kids' trusts.) The quintet also signed a five-year loan with U-Haul management, promising each would pay the company $4 million. If they can't repay the full amount of the loan or if they can't make their first interest payments this July, U-Haul could foreclose on the new stock and claim it as its own. Or, the firm could take chunks of the 8,099 shares instead of cash.

All this led to a lawsuit filed in Maricopa County Superior Court last August by the L.S. Group against Joe and current U-Haul management. The suit contends the new stock is a sham that amounts to the Joe Group stealing back majority control of the stock. However, the Joe Group has won the early rounds of what likely will be a lengthy court fight.

In recent weeks, a New York-based firm has offered to buy Amerco for $1 billion, or about $10,000 a share. That lends credibility to the L.S. Group's claim that U-Haul management's going price of $2,715 per share is absurdly low. Actually, an insider says, the New York firm has "offered to make an offer." But the only ones possibly receptive--the L.S. Group--don't control enough stock now to force a sale. The Joe Group, on the other hand, don't want to sell. After all, Joe Shoen is right where he wants to be--running U-Haul.

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