Pyrotronics Sells Fireworks Assets to A.M. Sunlight
Lacking the financing and insurance needed to make it through the critical Fourth of July season, Anaheim-based Pyrotronics Corp.--the West’s leading fireworks distributor--this week agreed to sell all of its fireworks assets, including its well-known Red Devil and Wildcat trade names, to an archrival.
The agreement to sell to Fullerton-based A.M. Sunlight Inc. was made in conjunction with Pyrotronics’ decision last week to file for protection from creditors under Chapter 11 of the Federal Bankruptcy Code.
Pyrotronics was controlled by W. Patrick Moriarty before the Anaheim businessman last year was convicted on political corruption charges. Moriarty sold his 30% interest in Pyrotronics back to the company in February, 1985, in a deal that called for him to receive $950,000 over a period of 10 years.
As a prelude to the new sale agreement, A.M. Sunlight, a 10-month-old distributor of Magic Dragon Fireworks, has loaned Pyrotronics $750,000, secured by receivables and other assets, to tide the distressed company through the industry’s biggest sales week of the year. The company also has agreed to cover Pyrotronics under its insurance policies in hopes that several cities that have cited insufficient liability in barring the sale of Red Devil and Wildcat fireworks will relent.
Without this assistance, Pyrotronics said in bankruptcy court documents, it would have been forced “to immediately close its operations and (would) miss the short upcoming fireworks season, thereby losing potential sales of $5 million.”
The sale agreement, scheduled to close Sept. 1 if approved by the Federal Bankruptcy Court in Santa Ana, deal calls for China Sunlight--a new company formed by A.M. Sunlight--to assume about $5 million worth of Pyrotronics’ liabilities.
Dennis H. Doss, China Sunlight’s lawyer, said that will be enough to pay off all of Pyrotronics’ creditors. In addition, he said, China Sunlight will have an option to purchase Pyrotronics’ four fireworks warehouses in Rialto for about $1 million.
Assets not included in the proposed sale, Doss said, are Pyrotronics’ real estate interests, a $2-million note and a Christmas tree business.
The last-minute rescue of Pyrotronics was remarkable, Doss said, because of the former bitterness between the two companies.
He said that Pyrotronics sued A.M. Sunlight last year, contending that salesmen who left to join the newly formed company had taken trade secrets with them.
Additionally, Doss claims that A.M. Sunlight has siphoned off about 30% of Pyrotronics’ business since it was formed.
According to court records, Pyrotronics on June 6 filed for protection from creditors under Chapter 11 of the Federal Bankruptcy Code. At that time the company had almost $6 million in assets and $31.6 million in liabilities, including $25.6 million in unsecured liabilities that Doss said relate to court judgments that may be awarded on existing lawsuits against the company.
Pyrotronics’ officials refused to comment Friday on the company’s financial condition.