Katz Invests $1 Million in Compucorp, Gets Key Post
Bernard B. Katz, the Beverly Hills financier who recently was forced to relinquish control of the day-to-day operations of Helionetics Inc., has invested $1 million in Compucorp of Santa Monica and assumed a senior management role in the money-losing office-automation company.
Announcing Katz’s involvement with the company Wednesday, Compucorp said the infusion of capital has enabled it to renegotiate $17 million in debt with Lloyds Bank California, its principal lender. Compucorp also said Katz, now the company’s largest shareholder, has been elected vice chairman of the board and a member of the executive committee.
With his investment, Katz owns about 18% of Compucorp’s outstanding stock.
“I control the company,” Katz said in a telephone interview from his home. “I saw the same sort of promise in this company that I saw in Helionetics four years ago. With good, frugal management, I think the company will make it.”
William M. Duke, who was hired in December as president and chief executive of Compucorp, said: “We are delighted that Mr. Katz will be taking an active role in Compucorp. It is at our urging that he has agreed to join our board. I believe that it was his effort (that transformed) Helionetics from a very distressed company to a company which is now actively traded on the American Stock Exchange.”
In 1980, Katz took Helionetics of Santa Ana, a one-product company that made power converters for the military, out of bankruptcy and built it into a company that makes a variety of loosely related high-technology equipment.
Late last year, Compucorp said it was in default on $17 million in debt. Under the new arrangement, Lloyds Bank will convert $8.5 million of the debt into 950,000 shares of newly issued Compucorp common stock, giving the bank about 17% of Compucorp’s outstanding stock. Katz said Lloyds Bank has given him voting control of its shares, a contention a Lloyds Bank spokesman could not confirm.
Lloyds Bank also has agreed to convert Compucorp’s remaining $8.5 million in debt into a loan due in 1992. Compucorp will pay only interest on the loan until 1987, when it will begin to pay off the principal as well.
Compucorp said the agreement with the bank was obtained as a result of Katz’s putting $500,000 in equity and $500,000 in convertible subordinated debt into the company.
It said the new financing should enable Compucorp to report a positive net worth for 1984.
The company also said Compucorp’s founder and chairman, Elmer R. Easton, has provided $100,000 under substantially the same terms and conditions as Katz.
Compucorp lost $3.2 million in the first six months of 1984 and is expected to lose as much as $4 million in the third quarter.
In early 1984, Compucorp received a three-year contract to provide word-processing systems to the Los Angeles County Superintendent of Schools. It also received a $4-million contract to install word-processing systems at about 300 Social Security offices.
In 1983, several Wall Street investors expressed concern that incidents in Katz’s past could tarnish Helionetics’ image.
In 1977, the Securities and Exchange Commission barred Katz from making exaggerated claims about the capabilities of products of Xonics Inc., a maker of medical devices that Katz founded in Van Nuys.
Katz says that the Xonics board forced him to leave and that the company later filed for Chapter 11.
In response to Wall Street’s concerns, the Helionetics board last year forced Katz to step down as a director and to put his 19% holding in the company’s stock into a voting trust.
Helionetics said, however, that terms of the trust were too lenient to satisfy Prudential-Bache Securities Inc., the New York investment banking firm that was considering acting as Helionetics’ investment banker.
Worried that Katz could easily dissolve the trust and resume his role in Helionetics operations, Prudential-Bache last month refused to take the job, Helionetics said.
