Computer Automation Delays Annual Meeting

Financially troubled Computer Automation stunned two dozen shareholders and a potential buyer when it abruptly postponed its annual meeting Wednesday, saying that liability insurance for its directors and officers had been canceled and that merger negotiations had reached a critical stage.

George Pratt, the company’s chairman and chief executive officer, refused to talk with reporters after he postponed the annual meeting until April 10 and Douglas Cutsforth, the president, declined to elaborate on the reasons for canceling Wednesday’s session. Nor would Computer Automation officials divulge the name of the insurer or explain why or when the liability policy had been canceled.

One possible factor in the action, however, is a 4-month-old lawsuit by Larry Doskocial, a Kansas businessman and Computer Automation investor who is suing the Irvine-based computer test-equipment maker for $16 million.

Doskocial, who owns a pizza-topping company, invested $3 million in Computer Automation and was planning on pumping another $3 million into the company when he suddenly pulled back and filed the suit. Among other things, his suit--filed in U.S. District Court in Los Angeles--charges that Computer Automation posted larger losses last year than company officials told him it would.

Usually, annual meetings are orderly business gatherings, Pratt told the stockholders as the annual meeting began. “But every once in a while,” he said, “we get something very unusual, as is the case here today.”

In a terse statement, Pratt said that with consolidation and reorganization on tap for the company, he had “no choice but to postpone the meeting.” He then banged down his gavel and rushed from the room to avoid questions.

Directors in Closed Session

Immediately following the aborted meeting, Computer Automation’s directors began a closed-door session with Gerald T. Hudspeth, chairman of Everett/Charles Test Equipment Inc., the Pomona company that wants to acquire Computer Automation.

Hudspeth, now a minority shareholder in Computer Automation, sat in the audience with a look of disbelief on his face as the annual meeting was canceled.

In a brief interview before he joined Computer Automation executives in the closed board meeting, Hudspeth said he had no idea that the cancellation would take place.

He said, however, that his company had recently presented its “final proposal” to acquire between 55% and 65% of Computer Automation. Now, he said, “I’d like to see some response.”

The outcome of the board meeting was not known late Wednesday, but earlier Pratt had told shareholders that results of the board’s discussions should be released “in the next several weeks.”

Hudspeth said he wants to acquire Computer Automation primarily because its products complement the test equipment made by Everett/Charles. He also said that the acquisition of publicly held Computer Automation would be the “easy way” for his privately held company to go public.

Ironically, Computer Automation unsuccessfully bid in 1980 to acquire Everett/Charles, Hudspeth said, adding that if Everett/Charles now acquires Computer Automation, he is “undecided” as to exactly how the combined firms would operate.

Hudspeth said that under a consolidation, the merged companies probably would operate out of a single location. He refused to speculate whether that location would be Irvine or Pomona.

Some Leave in Huff

Everett/Charles, which is 24 years old, has 200 employees, while 20-year-old Computer Automation has about 300 workers. Because it is privately held, Everett/Charles does not report earnings, but Hudspeth said the company has never posted a losing year. Computer Automation, however, has lost more than $20 million over the last three years.

Some disappointed shareholders--a few who had driven up in the morning rain from San Diego--walked out of the two-minute meeting in a huff. But others were more forgiving.

“I hate to see any company go through what this one has gone through,” said one shareholder, who identified himself only as a former manager for Computer Automation.