As a result of Abrams' internal investigation, B. Michael Merritt, president and CEO of the construction division, has resigned from the company and its board of directors. George W. Hodges Jr., vice president of the construction subsidiary, replaces Merritt as the senior officer of Abrams Construction Co. in charge of day-to-day activities. The firm's cooperation with the Justice Department also earned it and all subsidiaries a "conditional letter of amnesty."
The Nasdaq-traded company anticipates spending about $750,000 in its current fiscal year, which ends April 30, 2004, to complete the investigation. The company's common is trading in the $3.66-per-share range.
"As soon as we learned that something inappropriate was going on, we halted it; we disclosed it; and we corrected it," says Alan R. Abrams, the company's CEO. "We've run our company with honesty and integrity for nearly 80 years and we're going to keep running it that way in the future."
Abrams says the improprieties were first uncovered by members of Abrams Industries' senior management during a recent internal monthly financial meeting. Alan Abrams contacted the company's outside counsel, Kilpatrick Stockton LLP, which confirmed the CEO's suspicions, according to the company's statement.
Abrams notified the anti-trust division of the US Department of Justice, which then issued the "conditional letter of amnesty to Abrams Industries and its subsidiaries for the company's cooperation in recognizing and then immediately reporting the irregularities," the statement says.
"Based on our internal investigation, it appears that the specific improprieties were confined to a bidding process for a particular commercial construction customer," Abrams says. "At this time, we have no reason to believe that any of our other customers were in any way affected."
He adds Abrams Industries "remains financially strong and we are taking appropriate measures to protect our long-term financial position."
"We are pursuing a deliberative process to ensure that this isolated incident will not disrupt the interests of our customers, our stakeholders and our stockholders," Abrams says.
Through its Abrams Properties Inc. subsidiary, the company owns or controls over 1.5 million sf of shopping centers in the Midwest and Southeast. In metro Atlanta, Abrams owns 200,000 sf of office properties.
Established in 1925, Abrams Construction Inc. builds and renovates retail stores, shopping centers, financial institutions, distribution and manufacturing facilities, office buildings and other commercial projects.
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