SEC Seeks Ouster of 4 Officers at Oak; Firm’s Debt Problems Grow

The Securities and Exchange Commission is seeking to remove four senior officials, including the president and chief financial officer, of troubled Oak Industries Inc., it was learned Friday. Separately, the pay-television and electronics company revealed that it may seek bankruptcy protection if it is unable to restructure $230 million in debt.

The action to remove Oak’s officers arises from a 14-month investigation by the SEC. A consent decree could be filed as early as next week, according to a government source familiar with the case, and will likely require Oak to hire an outside lawyer and auditors to make an independent investigation of the government’s allegations.

Oak, in a filing dated Thursday with the California Department of Corporations, said it anticipates that it will sign a proposed consent decree to enjoin the company from violating various anti-fraud and record-keeping provisions of the securities laws.

However, the company said that President Raymond W. Peirce, Chief Financial Officer Frank A. Astrologes and two other senior executives are not expected to sign similar consent decrees, and that the company will oppose the agency’s demand that the officers resign within six months.

Focus on Officer

The filings did not explain why the SEC sought the executives’ ouster, and Oak would not comment on them. The SEC does not comment on the status of its ongoing investigations.

The filings said much of the SEC’s investigation focuses on former Oak Chairman and Chief Executive Everitt A. (Nick) Carter, who resigned his positions last November.

Oak’s filings said the SEC’s investigation has focused on the accuracy of Oak’s financial disclosures since 1980, questions of securities trading by officers on the basis of “inside” corporate information, propriety of transactions between Carter and his friends and family, whether certain transactions were primarily intended to benefit Carter and whether any officer director or employee obtained kickbacks or payments.

Meanwhile, Oak said in a state ment Friday that it “does not expect” to meet its cash needs this year, including scheduled interest payments in April and May, unless at least 70% of its bondholders agree to a restructuring that would suspend cash interest payments “for the foreseeable future.”

“The company’s inability to meet its obligations . . . could result in reorganization under Chapter 11 or liquidation under Chapter 7 of the United States Bankruptcy Code,” the company statement said. Astrologes said a bankruptcy filing would be considered “only if everything goes wrong.”

Oak’s ability to survive and complete its restructuring is also contingent on obtaining an additional $10 million in secured loans, according to the offering circular for a proposed exchange of $230 million in Oak debentures for a combination of stock, notes and warrants.

Expects Operating Loss

However, Oak acknowledged in the state filings that it is “having difficulty obtaining credit on favorable terms, either on a secured or unsecured basis.” The company’s lines of credit with Continental Illinois Bank and First National Bank of Chicago expired in December, and Astrologes said Oak is currently in negotiations with “several California banks” for new lines.

According to the offering circular, Oak will have operating losses in the fourth quarter of 1984 of about $6 million, in addition to previously reported write-offs of about $80 million for the disposition of its over-the-air pay-television service in Los Angeles.

Last week, Oak sold its Los Angeles ON-TV operation to rival SelecTV and television station KBSC Channel 52 in Corona, which broadcast the ON service.

Oak also said it is considering the liquidation or sale of its communications division. That division, which manufactures cable-television equipment, is expected to lose about $9 million in 1985, the company said. A shut down could result in “substantial additional losses.”

Carter’s departure from Oak will be cushioned by so-called golden parachute agreements that will pay him more than $375,000 per year for at least the next five years, according to the offering circular.