Simon Resigns as Director of Helionetics

Former Treasury Secretary William E. Simon said Thursday that he has left the board of Helionetics Inc. It was the second resignation of a key director of the Santa Ana high-technology company in two weeks.

In a statement, Simon said he resigned “for personal reasons.” Simon’s secretary said he was in the Caribbean and could not be reached for comment.

A spokesman for Helionetics said that Simon’s resignation had been expected but that its timing came as “a surprise.” The spokesman said that Simon had been telling board members for about a year that he had “other obligations that made it impractical to stay on at Helionetics” but that no one had expected him to resign so soon.

Two weeks ago, Charles W. Missler, who joined the company one year ago as chairman, president and chief executive, resigned, also citing “personal reasons.”

Sources close to the company say Missler was “fed up” with what he apparently saw as the refusal of Bernard B. Katz, Helionetics’ largest shareholder, to relinquish control of the company.

Although Helionetics insisted Thursday that Simon’s resignation had nothing to do with Katz, two top executives at the company told The Times in November that Simon had been upset for several months over Katz’s reluctance to remove himself from day-to-day operations.

Michael Mann, acting vice president of the company, refused comment on Simon’s resignation except to say that he did not expect any other directors to leave. The remaining board members have indicated their strong commitment to the company,” Mann said.

Simon’s resignation was one condition under which Katz would be allowed to dissolve a voting trust containing Katz’s 19% share in Helionetics. After a yearlong battle with the Helionetics board,Katz created the trust two months ago to put himself at arm’s length from the company.

In a statement Thursday, Katz said he has no intention of terminating the trust. The Beverly Hills financier could not be reached for comment or to explain why he had made Simon’s resignation a condition to allow dissolution of the trust.

Helionetics makes a variety of military equipment, including power transformers and a communications laser.

The company’s stock closed Thursday on the American Stock Exchange at $5.75 per share, down $0.125.

Simon, who was Treasury secretary under President Gerald R. Ford and in 1973 was administrator of the Federal Energy Office, joined the company’s board in May, 1983.

Although Katz took Helionetics out of bankruptcy in 1980 and brought several prominent business and defense leaders such as Simon to the company’s board, the directors began to feel pressure in early 1983 from Wall Street investors who were concerned that Katz’s controversial business practices would tarnish the company’s image.

In 1977, Katz agreed, without admitting or denying guilt, to a Securities and Exchange Commission order barring him from making exaggerated claims about products of Xonics Inc., a maker of medical devices that Katz founded in Van Nuys.

Last March, Helionetics’ board forced Katz to resign as a director. The company also forced Katz to set up the voting trust. However, Helionetics said, terms of the agreement were too lenient to satisfy Prudential-Bache Securities Inc., a New York investment banking firm that Helionetics hoped to retain.

Helionetics said that when Katz refused to modify terms of the trust three weeks ago, Prudential-Bache declined to become Helionetics’ investment banker. Missler resigned one week later.