Farmer Bros. Asked to Open Books
By CONOR DOUGHERTY
The largest institutional investor in Farmer Bros. Co. has demanded that the company open its financial records to determine how it is managing its investment funds.
The move by Franklin Mutual Advisers LLC comes a month after it asked the Los Angeles-based coffee concern to split its operating division from its investing activities.
Franklin Mutual, which controls 9.6 percent of Farmer Bros. outstanding shares, has been involved in a years-long tussle with Farmer Bros. and its board, which are notorious for shunning investors.
For the past few months, Franklin, a unit of San Mateo-based Franklin Templeton Investments, with $270 billion in assets under management, has been sponsoring a shareholder forum to determine ways to boost Farmer Bros. stock.
At issue is Farmer Bros.’ pool of investment funds, which, as of the quarter ended March 31 totaled $226.8 million, 56 percent of corporate assets. Franklin believes the company has no certain plans for the money and wants Farmer Bros. to register with the Securities and Exchange Commission as an investment company.
An investment company designation would change how Farmer Bros. reports its results and require the company to hire investment professionals to oversee the funds.
To obtain the records, Franklin is taking advantage of a California law that allows shareholders to demand and inspect company records on site and during normal business hours. The demands were made in a July 26 letter to Roy F. Farmer, Farmer Bros. 85-year-old chairman. A copy of the letter was attached to a filing with the SEC.
Officials from Franklin were not available for comment. Farmer Bros. did not return calls seeking comment.
Under California law, Franklin may send a team of lawyers and accountants to Farmer Bros.’ Torrance headquarters. Farmer Bros., which has ignored Franklin’s demands thus far, is not required to do more than open the door, according to Gary Lutin, an investment banker who has been chairing the ongoing forum for Farmer Bros. shareholders. He said Farmer Bros. had not responded to the demand to open its books.