Shake-up for American Woolen

In the fight for control of the money-losing American Woolen Co. (TIME, Feb. 8), the result seemed certain. Six of the directors, including President Francis W. White, favored a plan to sell off eleven of the company's high-cost northern mills (nine of which have already been closed down) and retire about $20 million of its preferred stock to cut dividend charges. They were opposed by a group of directors including Frederick C. ("Buck") Dumaine, 51, boss of the New Haven railroad. But Dumaine had only five votes on his side. Last week, in a surprise coup, the Dumaine faction won control of the board and apparent victory over the management plan.

The sudden reversal was caused by some fast action by Buck Dumaine and his cohorts. Dumaine had got word that President White was tired of the fight and wanted to quit. Ready to replace him as president, Dumaine heard, was Director Robert H. Montgomery, a member of the White group. Buck Dumaine moved to get a board majority before the switch could take place.

He called on E. Howard Bennett, 72, longtime publisher of the trade paper, America's Textile Reporter, which calls itself "the most powerful influence in the textile industry." As an American Woolen stockholder, Bennett had opposed the management's plan. On his own, he had already started rounding up proxies in opposition to the management, in only eight days had won almost 10% of the stockholders to his side. Dumaine asked and got Bennett's support.

With Bennett lined up, one of Buck Dumaine's allies, Director Roy A. Young, hurried off to have lunch with Director Ray Morris, a New York financier who had originally voted with President White and the management faction. Young won over Morris. Then the Dumaine group got a break. When American Woolen's board met last week, Director William Wardall, who had taken no part in the fight, resigned. With Morris now on their side, Dumaine & Co. were able to elect Bennett to fill the vacancy. That gave them a majority, and the new board forthwith chose as chairman Roy Young, 71, longtime banker and a director of American Woolen since 1947. 'The board's united now," said Dumaine gleefully. "Now we can do something about the company."

Part of the reason for management's surrender was that it was clear, from Bennett's vote-getting campaign, that management might lose the proxy fight. Furthermore, the company was getting a bad name in the trade because of the fight, and salesmen reported that customers were shying away for fear that American Woolen might not be able to deliver the goods. With the new balance of power, it looked as if the fight would be patched up. The board shelved the original plan to call in the preferred stock, decided to use the $20 million for modernizing plants and planned a careful review of the list of plants to be sold. On top of that, word got out at week's end that American Woolen was dickering to merge with another New England textile company, not Textron, which had offered to do so. When stockholders meet in April, President White is expected to resign. Said American's new Chairman Young: "I want to put the company back on a profitable basis."

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