Retreat

Raider Louis Wolfson, who parlayed a Jacksonville junkyard into a $240 million empire and attempted to gain control of giant Montgomery Ward, sounded a general retreat last week. He is getting out of Montgomery Ward and selling all his 59,000 shares (at an expected profit of about $750,000). Furthermore, he is thinking of selling the Highway Trailer Co., the Marion Power Shovel Co. and its subsidiary, the Osgood Co., all controlled by Merritt-Chapman & Scott, which Wolfson runs as chairman, president and chief stockholder (more than 157,000 out of 5,374,360 shares).

So far this year four other members of the Merritt-Chapman & Scott family, picked up by Wolfson during his empire-building days, have gone on the block: Newport Steel, Shoup Voting Machine, Utah Radio Products, Nesco (house-wares). Last week, totting up the results, the Wall Street Journal figured that Wolfson may have lost on the deals. This was denied by Wolfson's business lieutenants, who contended the sales indeed had been profitable. Losses, if any, were only paper losses.

Need Money? But whether Louis Wolfson made or lost money--and his deals were so complicated that outsiders could hardly tell--the motive that led Wolfson to reverse himself and preside over liquidation of part of his empire was plain: he needed cash. In seven years of fast dealing he had transformed Merritt-Chapman & Scott from an old-line marine construction and salvage company into a burgeoning industrial complex (paints, chemicals, steel, truck trailers, shipbuilding). Assets soared 138% to $239.5 million; the gross went up 800% to $360.3 million. But as the empire grew, so did its financial needs. Wolfson halved the regular annual $2 dividend last March to $1 plus a 6% stock dividend. He intended to save cash.

The final squeeze was applied by the tight money market, just when Wolfson needed cash more than ever to handle the increasingly big contracts he had taken on, e.g., construction of a $120 million, 1,036-ft. Forrestal-type supercarrier, and a $92 million Priest Rapids Dam with its 631,000-kw. power plant, one of the largest awards ever made to a single contractor.

Needed: a Dock. To get the carrier contract. Wolfson underbid Newport News Shipbuilding, which has built two of the ships, thus acquired experience which enabled it to bid about 6% lower on the second job than on the first. It is, moreover, traditionally the industry's shrewdest bidder. Nevertheless, Wolfson underbid Newport News by $6,000,000-$7,000,000. At that price, experts estimate, Wolfson will lose money. In addition, Wolfson's firm must now invest an estimated $8 million to $10 million in a graving dock just to begin building the sea giant.

Wolfson's difficulties were reflected in Merritt-Chapman & Scott's stock. During the past two years, in the midst of the great bull market. Merritt-Chapman & Scott shares have sunk lower and lower, from 26 3/8 to 18 1/2.

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