Is this business or charity? H.F. "Gerry" Lenfest, the major local philanthropist, onetime cable mogul and ex-member of the Forbes 400,
disclosed last week to the SEC that he had upped his stake in the small Bucks County defense contractor
Environmental Tectonics Corp. (
NYSE: ETC) to nearly 12 percent with a $2.2 million stock purchase. On the same day,
an Alabama investment company simultaneously sold the same amount of ETC stock. We couldn't figure out what was going on -- until yesterday. ETC
announced after the markets closed that it had agreed to pay the U.S. Navy $3.3 million to settle their dispute over a submarine rescue de-compression chamber. ETC in turn will take a charge of $5.9 million, financed in part "by additional investment by Gerry Lenfest, a significant shareholder and member of the company's board of directors."
Whether Lenfest is plowing in more money to make the best of a bad investment, or backing up ETC chairman William F. Mitchell on an undervalued gem, only he knows for sure. Note that Lenfest already has been giving loans and "personal guarantees" to support ETC. The settlement with Uncle Sam does clear a major hurdle, which ETC said had cost it $6.7 million over the past year and drove its first-quarter net loss to $8.7 million, or 98 cents a share, up from $2 million, or 23 cents per share. Although sales have been essentially flat, Wall Street evidently liked Lenfest's transaction at the stock's five-year low and has pushed up its price 25 percent since last Thursday.
- Thomas Ginsberg
