Suspended President Nets Ally for Control of Stater

An investor group led by the suspended president of the Stater Bros. grocery chain said Friday that it has found an ally in its fight to gain control of the company’s board of directors.

Jack H. Brown, who was suspended as president in February, said Craig Corp. of Compton has agreed to vote its newly acquired shares for the three-member slate of directors proposed by Brown’s La Cadena investor group at Stater’s April 28 annual meeting. Stater Bros. is mounting an opposing slate of directors.

Craig revealed Friday that it bought 233,150 shares, or 5.6%, of Stater Bros.’ common stock at an aggregate cost of about $5.2 million. Brown’s group owns more than 1.8 million shares, giving it control over about 49.5% of Stater’s stock, including Craig’s holdings.

Brown’s group is being opposed by Stater Chairman Bernard R. Garrett, who controls 38.72% of Stater’s stock. Garrett recently offered to buy Stater Bros.--which he and Brown’s group bought in 1983 and later took public--for $20 per share in an unspecified amount of cash and securities.

The feud between Garrett and Brown surfaced in February, when the company suspended Brown as president and chief executive and filed suit against him, alleging that he manipulated earnings reports to buy stock at depressed prices. Brown has countersued, vehemently denying the charges.

The agreement with Craig Corp., which recently sold its consumer electronics business, calls for La Cadena and Craig to hold an equal number of shares, although the details are still being worked out, said Bruce Varner, a Stater director and Brown ally. To accomplish that, the agreement states, Craig or La Cadena could buy more Stater shares, La Cadena could transfer some of its holdings to Craig or Stater Bros. could be reorganized, assuming that Brown’s group is successful in its quest for control.

Craig President Peter M. Behrendt said his company wants to be more than an investor in Stater and would like to be involved in the operation of the 94-store grocery chain. The agreement calls for Craig and La Cadena to cooperate in trying to elect two Craig nominees to the Stater board, although such a move might not be possible before the 1987 annual meeting.

Varner said La Cadena became aware of Stater stock purchases by Craig and was introduced by an investment banker.

A Stater spokesman said the company is reviewing the Brown group’s announcement.