Computer Test Equipment Firms to Merge
Computer Automation, suffering from continuing losses and struggling to find a financial backer, has tentatively agreed to merge with Everett/Charles Test Equipment of Pomona, according to Jerry Hudspeth, chairman and president of Everett/Charles.
The pending move could end months of financial uncertainty for Computer Automation, a once high-flying electronics company that faltered from a series of missteps and amassed losses totaling more than $20 million in three years. Problems were so severe that President Douglas Cutsforth acknowledged in December that the company could be forced into bankruptcy.
The tentative merger plan, Hudspeth said, calls for the two companies--which make test equipment for computer parts--to combine their operations, possibly in Pomona, where Everett/Charles employs about 200 workers. The fate of the 300 employees at Computer Automation’s Irvine headquarters has not been settled.
Hudspeth said the deal, which has not been put in writing, could be completed in 90 days. Computer Automation officials could not be reached for comment.
The merger offers Computer Automation a chance to erase its losses as well as settle a $16-million lawsuit that was undermining the company’s ability to raise desperately needed operating cash.
According to Hudspeth, the merger provides that Computer Automation will reach a settlement on the lawsuit filed in December by Larry Doskocil, a Kansas businessman who had invested $3 million in the company and had once planned on rescuing it from its financial woes. Doskocil, whose other interests include a pizza topping manufacturing plant, could not be reached for comment.
Hudspeth said he approached Computer Automation with the idea of the merger because the two companies make compatible product lines that form a “total solution” for customers. The companies make equipment to test printed circuit boards for errors before they are installed in computers and other electronic devices.
In its 1985 fiscal year, Computer Automation had a loss of $12.7 million on sales of $40.4 million, while Everett/Charles had sales of more than $20 million. Hudspeth declined to reveal his company’s earnings but said it was profitable.
Hudspeth, who controls more than 60% of the stock in the privately held Everett/Charles, said that the surviving company would be publicly held and that he would be chairman of the new company.
