Record Losses Continue at Helionetics Inc. : Legal and Interest Costs, Restructuring Blamed

Just a month after reporting record annual losses, Helionetics Inc. on Thursday said it posted a record first-quarter loss of $1.38 million after net income of $103,100 during the same 1985 period.

“The saga continues,” said Michael Mann, president of the Irvine defense contractor. He attributed the latest red ink to interest expenses, legal expenses and the high cost of restructuring the company’s debt.

Added to the ongoing tale of unpaid loans and debt restructuring was the revelation Thursday that Roger Molvar, the company’s chief financial officer--who had been on the job just one year--has resigned.

Molvar is the former Arthur Andersen executive who helped restructure Helionetics last year when it eliminated four divisions. He will be replaced by the company’s controller, Adrian Cayetan.

The change of financial officers comes at a time when the company’s financial position is insecure, at best. “There’s always the possibility of going Chapter 11,” said Mann, “but I don’t believe that would be in the best interest of the company or its creditors.” A Chapter 11 filing, under federal bankruptcy law, enables a company to continue operations while working out a plan to repay some or all of its debt.

‘Back to Basics’

There was one bright spot in Helionetics’ first-quarter report--revenue of $3.56 million was up 4.4% from $3.41 million in the comparable period a year ago.

Mann said that last year’s restructuring of the company has brought Helionetics “back to basics.” The backlog of orders for its lasers, electro-optical equipment and power conversion equipment totals nearly $18 million. “That’s a year’s worth of business,” he said.

But much of the next year will also be spent negotiating with creditors. The company still owes its principal lender, Bank of America, about $11.5 million--an amount it has owed since January, 1985. And in April, the bank received a $4.5-million default notice on an employee stock ownership plan from Downey Savings & Loan Assn., one of its principal creditors.

Mann said that no major new layoffs are expected but that the company’s payroll is down to 200 workers from a peak of 600 in 1984.

Although he would not project when the company would return to profitability, Mann said, “we obviously believe the worst is behind us.”