Citing a potential conflict of interest, Bernard Katz, the controversial principal shareholder of Helionetics Inc., has resigned from the board of the Irvine defense contracting firm for the second time in 13 months, the company announced Thursday.
At the same time, Michael Mann, president, revealed that Helionetics has laid off 200 employees, or nearly one-third of its work force, in the last five months to save money while it attempts to resume its once-torrid growth rate and prop up declining profits. Cost-cutting efforts were also cited for the company’s decision to abandon its opulent corporate headquarters in Santa Ana, a move that has prompted a breach-of-contract suit from the landlord.
Katz, who owns about 19% of Helionetics common stock, resigned from the board of directors Wednesday afternoon, just hours after being reelected at the company’s annual meeting. Katz said his resignation was prompted by the company’s decision to buy out his holdings in two Helionetics subsidiaries, HLX Laser and Marinco HLX.
“I thought it would be a conflict to negotiate with the board if I were a member,” Katz explained. He said he would consider returning to the board after the acquisition negotiations are concluded “only if the board members insist that I do. It would not be of my own choosing.” Katz said he did not quit the board prior to the shareholder vote because ballots had already been printed when he decided to withdraw.