Ameron faces sticky suits, longtime CEO Tollenaere is leaving.

Lawrence Tollenaere, who for the past 27 years has headed one of Los Angeles County's oldest and largest companies, Ameron Inc., told the Business Journal last week that he will soon step down as chairman, chief executive and president of that Monterey Park-based manufacturing concern.

Ameron, with antecedents dating back to 1907 and annual sales topping $465 million, manufactures industrial-grade concrete and steel pipe, protective coatings and linings, and various other construction materials.

Tollenaere, 69, revealed his intention to retire during a phone conversation in which he declined to be interviewed for an upcoming Business Journal profile.

"I know my time is coming to a conclusion, so you might be better off waiting and doing (a Journal Profile on) my successor," Tollenaere said.

The long-time chieftain refused to specify his retirement date, and confirmed that Ameron does not have a mandatory retirement age.

"I can't tell you any more than I tell my directors; but it will happen before too long," he confirmed. "We had a man in the chair (to be successor) and tried to follow a program. But something happened to interrupt that program."

That comment was apparently a reference to the unexpected and unexplained departure of Tollenaere's heir apparent, Thomas J. Keefe, in May 1991. Keefe had been Ameron's president and chief operating officer. His departure closely followed the unexplained departure of William Craven, Ameron's vice president of employee relations.

"We don't publicly discuss personnel matters," Tollenaere said last week, when asked about those departures.

Asked to identify the candidate or candidates being considered to replace him, Tollenaere tersely replied, "We're working on it; our stockholders will know before anyone else."

Ameron's stock is traded on the New York Stock Exchange. Its largest shareholders by far are Tollenaere, three foreign investors and two domestic investors. Tollenaere owns 3.94 percent of the company's outstanding common stock, according to the company's 1992 proxy statement.

Among the three foreign investors, Societe des Tuyaux Bonna (a French water utility company) owns a 12.38 percent stake, Taro Iketani (a Japanese steel mogul) has 9.33 percent and F.H. Fentener van Vlissingen (one of Holland's wealthiest citizens) owns 7.62 percent.

The two domestic investors are Hawaii Investor Group-Rock, which owns a 9.83 percent equity stake, and Pioneer Fund of Boston, which owns 5.80 percent.

All three foreign investors are involved in various joint ventures with Ameron, and none of the outside investors has openly challenged Tollenaere's authority at Ameron, sources confirmed.

Hence, Ameron has been run largely like a private company by Tollenaere, with the outside investors going along with the chief's decisions, sources said. That situation, which has applied for nearly three decades, raises questions about what might happen at Ameron after its chief steps down.

James S. Schmitt, president of the Somis, Calif.-based securities firm West-country Financial, has followed Ameron's financial performance for years. And he does not share outside investors' confidence in Tollenaere's leadership, implying the company might actually be better off after Tollenaere steps down.

"Many of (Ameron's) assets could and should earn a lot more money than they do, and the company's stock has rarely traded above book (value)," Schmitt said. "That performance reflects on management. And since Tollenaere really is management, and has been for a long time, I suppose it (the poor performance) reflects on him."

Ameron's annual sales have edged up at about a 4-percent-a-year clip in recent years, climbing from $426.5 million in fiscal 1989 to $445.9 million in 1990 to $465.1 million in 1991. (The company's fiscal year ends Nov. 30.)

But its net income slid from $14.1 million in fiscal 1989 to $11.4 million in 1990 to $7.6 million in 1991.

In the fiscal first quarter ended Feb. 29, Ameron suffered a net loss of $2.0 million, almost quadruple the net loss it suffered a year earlier. Ameron had not yet filed its second-quarter results as of press time.

The company attributed its larger net loss in the first quarter to a 13.3 percent drop in its sales volume and to a court judgement rendered against the company for patent infringement. Ameron stated it intends to appeal the recent $4 million patent-infringement judgement.

However, another lawsuit, filed Jan. 24, 1992, is what is causing widespread concern about Ameron's future, sources said.

That $146.7 million lawsuit, filed by the Central Arizona Water Conservation District, alleges that six concrete pipes manufactured and installed by Ameron and other firms are defective and need to be replaced. The pipes were installed about 15 years ago as part of a federal project to bring water to Arizona from the Colorado River.

Ameron downplayed the lawsuit's significance in its 1991 annual report, published after the Jan. 24 lawsuit filing.

Stock analyst Schmitt, however, countered that the Arizona lawsuit is indeed significant, and that it may even be a harbinger of far-reaching problems that could broadside the entire multibillion-dollar concrete-pipe industry.

"Ameron had similar problems a few years ago on pipe it laid in Saudi Arabia," Schmitt explained. "They had to replace it at a tremendous cost."

"This (Arizona lawsuit) opens a whole nightmare over the extent of defective concrete pipe laid over the years, and who the hell is to blame," Schmitt continued. "Once that's untangled, you face the whole question of how much (of the resulting liability) is going to be covered by insurance."

Adding to what could be onerous pipe-replacement costs is the possibility that municipal water agencies, Ameron's major customers, might foresake future purchases of concrete pipe altogether, opting instead for welded-steel pipe.

"It reflects on the whole concrete-pipe industry going forward," Schmitt asserted.

Meanwhile, Ameron's stock, which closed at $33.25 a share on June 2, has continually traded below its book value of $36.70 a share. And the stock price is less than half the $80 a share analysts estimate the stock would fetch if Ameron's assets were liquidated.

Ameron did recently sell off one of its major assets, its Monterey Park corporate headquarters facility. That property was sold to the Los Angeles County Sheriff's Department a few months ago for $21 million.

The department plans to relocate its downtown Los Angeles headquarters to there within the next few months, a sheriff's department press deputy confirmed last week.

Meanwhile, Ameron plans to relocate its corporate headquarters in September to leased space in the First Interstate Tower at 245 S. Los Robles Ave. in Pasadena.