Officials of Allied Research Corp., a small, Baltimore-based defense contractor, are puzzled by the recent action of the company's largest stockholder, an investor from Saudi Arabia.
"We don't know what it means," said Richard Farrell, who handles investor relations for Allied. He was referring to a filing with the Securities and Exchange Commission by Kusai H. M. Al Azzawi -- holder of a 15 percent interest in Allied -- that left the door open to a variety of possibilities, including replacing the company's board of directors.
In an amendment to a Schedule 13d filed with the regulatory agency, Mr. Azzawi said he was discussing with Allied's management "the possible replacement of or additions to" the board.
The filing said that Mr. Azzawi also expected to discuss these possibilities with other shareholders.
In the brief, three-sentence document, Mr. Azzawi also indicated that he may acquire additional shares of Allied, depending on market and economic conditions, or dispose of some or all of his common stock "in open market transactions, private transactions or otherwise."
"What I read into it is that he covers every contingency," Mr. Farrell said. "It says, 'I may . . .,' and you fill in the blank.
"He says he may delete from the board or add to the board, but there is no letter of intent of what he's going to do."
Mr. Farrell said that he was at the disadvantage of not having direct contact with Reinald W. Carter, president and chief executive of Allied, who is traveling from Spain to Brussels, Belgium, on a business trip.
Mr. Farrell said he did not know if Mr. Carter has met or will be meeting with Mr. Azzawi during his trip. Mr. Carter could not be reachedyesterday.
Asked if the filing could be the first phase of a corporate takeover, Mr. Farrell responded: "I've been asked this question by professional investors today, but I don't have an answer to that. I have not seen anything that says he intends to take over the company."
Officials of Lindner Management Corp., the St. Louis-based investment adviser to the Lindner Mutual Fund and a holder of about 13 percent of Allied's outstanding stock, were unavailable to comment yesterday on the government filing.
Allied Research, which had been trading at about $5 a share on the over-the-counter market, has climbed steadily in recent weeks, buoyed by various contracts awarded to the company.
The stock closed yesterday at $9.875, down 50 cents.
The latest jump occurred two weeks ago when the company announced that it had been awarded an $88 million contract -- one of the largest in its history -- to produce anti-armor ammunition for an unidentified "friendly" foreign country.
At the time of the announcement, Mr. Carter noted that the award increased the backlog of business orders about 50 percent, to $240 million.
Allied has struggled in recent years, reporting losses from 1987
Last year, it had a profit of $23,413, or 1 cent a share, on sales of $51.2 million. In 1989, Allied posted a loss of $7.4 million on revenues of $44.8 million.