Shareholder wants to oust road builder’s board

Grace Leong

Monday, Nov. 19, 2001 | 10:54 a.m.

A major shareholder of Meadow Valley Corp. of Phoenix, a big highway contractor in Las Vegas, claims Meadow Valley is being mismanaged and wants its board removed.

Las Vegas ready mix concrete supplier Silver State Materials Corp., which owns 14.4 percent or 512,300 Meadow Valley shares, and its chairman, Cyrus Spurlino, who owns 1.3 percent or 47,800 shares, sued Meadow Valley and its seven directors in Clark County District Court on Thursday.

Silver State, which claims it has a right as a holder of more than 10 percent of Meadow Valley's stock to demand a special meeting of shareholders, seeks to remove the current board and elect a new board.

Silver State alleges the directors weren't validly elected in 1994 and 1996 and have stood for re-election in successive years under false circumstances as though they had previously served valid terms.

Silver State claims the directors weren't validly elected because in its 1995 stock registration statement with the Securities and Exchange Commission, it said its board would be elected with staggered terms. This was false, Silver State said, because Meadow Valley's bylaws at the time did not provide for staggered terms.

The suit also accused the Meadow Valley board of misleading the plaintiffs into buying Meadow Valley shares "for excessive consideration."

"The current Meadow Valley board hasn't done a good job running the company," Spurlino said. "They may have revenues, but they aren't making profits."

Meadow Valley specializes in building highways, highway bridges and overpasses including the massive new "Spaghetti Bowl" interchange in downtown Las Vegas.

It reported on Nov. 13 its revenue for the third quarter ended Sept. 30 increased 18 percent to $52.6 million from $44.4 million from the same period last year. It said its third-quarter net income was $325,000, up from $18,000 in the same period last year.

But Spurlino said: "With that amount of revenue, Meadow Valley has to make more profit than that, because of the assets they employ to do that amount of work. ... Instead the value of the stock has gone down in the last three years from (a high of) $5 to about $2 this year."

The stock closed at $1.98 on Friday.

The defendants could not be reached for comment on the allegations.

Separately, Silver State and Spurlino filed a statement with the Securities and Exchange Commission saying their call for a vote on removing the directors "may result in a contested solicitation for the election of directors, a change in the present board of directors or management of the issuer, a change in the terms of directors, the filling of vacancies on the board and one or more changes in the bylaws of the issuer (Meadow Valley)."

Silver State and Spurlino also disclosed they have been in talks to acquire the Las Vegas and Phoenix concrete operations of Ready Mix Inc., a Meadow Valley subsidiary, and that Meadow Valley provided them information on these operations.