General Automation May Sell Unit : Tentative Agreement Reached on Circuit Board Division
Debt-ridden General Automation Inc. has signed a preliminary agreement to sell its stagnant printed circuit board division to Helix Circuits Inc., the companies announced Wednesday.
An industry analyst estimated the value of the sale of General Automation’s National Technology unit at $5 million and said it would probably involve a combination of cash and notes. Neither company would discuss the financial arrangements.
For the record:
12:00 a.m. May 3, 1985 For the Record
Los Angeles Times Friday May 3, 1985 Orange County Edition Business Part 4 Page 2 Column 5 Financial Desk 2 inches; 38 words Type of Material: Correction
National Power Technology, a former General Automation Inc. unit, has been profitable for the last three years and was sold last year for more than $2.5 million. In a story in Thursday’s edition, the company’s financial results and sales price were incorrectly reported.
The sale, still subject to a number of conditions and to regulatory approval, is scheduled to close before the end of May.
General Automation had been negotiating for months with a number of possible buyers of its printed circuit board division, said a spokesman for the Anaheim computer maker.
The circuit board division, located in Irvine, is a unit of Technology Circuit Design Inc., which in turn is a wholly owned subsidiary of General Automation. Toronto-based Helix Circuits Inc. has other printed circuit board divisions in the United States and is anxious to expand its presence in Southern California.
Last November, Helix filed with the U.S. Securities and Exchange Commission to offer $1.5 million common shares in the United States.
For General Automation, the sale will infuse the company with cash to pay debts and to expand its strongest microcomputer line--known as Zebra.
“They’re simply redeploying their slower growth divisions. The move makes sense,” said Dick Pickup, senior vice president at the Newport Beach office of Morgan, Olmstead, Kennedy & Gardner.
General Automation senior executives were unavailable for comment Wednesday, but a company spokesman said that other conditions of the sale included a favorable long-term contract under which General Automation would continue to purchase printed circuit boards from National Technology. The division posted 1984 sales of $20 million.
On Tuesday, General Automation officials revealed that the company’s stock would no longer be traded on NASDAQ’s National Market System because the company’s net worth fell more than $100,000 below the required $375,000. The company, which lost $974,000 in the second fiscal quarter, is appealing to NASDAQ’s board of governors for reinstatement. Meanwhile, the company’s common stock will be traded over the counter.
Aside from National Technology, General Automation has recently divested itself of other money-losing divisions, including its power supply division, National Power Technology, which was sold for $1.2 million earlier this year to some London-based private investors.
The company’s 220 employees in Irvine and Santa Ana all are expected to be retained, the General Automation spokesman said. He said General Automation plans no other immediate divestitures, and noted that the company plans to introduce some new, high-speed computer processors within the next few months.
Business Increase Expected
An executive at one of Helix’s U.S. subsidiaries in Pomona said he expects the sale to greatly increase business for his company and for Helix.
Bill Reynolds, general manager at CirCal Inc., said he has 32 employees at his printed circuit board facility now, and that the number could double within a year as a result of the acquisition.
“Helix does a lot of business with the military, and it’s a lot easier to do business in an area where companies like Hughes and McDonnell Douglas are located,” Reynolds said. He added that the military market looks stable for the next 10 years.
