Helionetics Fires President for Role in Ills : Departing Mann Blasts Ailing Firm’s Founder
Just four days after filing for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, Helionetics Inc. fired its president on Monday for his role in the ailing defense contractor’s financial crisis.
“We just didn’t think he was up to the job,” H. Alfred Sklar, a Berkeley businessman and Helionetics director, said of Michael Mann, the company’s president and chief executive for the last 19 months. “We didn’t feel all the steps were taken to avoid the Chapter 11 bankruptcy filing last Thursday.”
Hours after his dismissal, Mann issued a blistering attack on his chief detractor, Beverly Hills investor Bernard Katz. He claimed that Katz, Helionetics’ founder, largest single shareholder and a former director, had engineered his ouster for personal financial reasons.
Mann said that he and Katz had disagreed over the future of Helionetics’ laser subsidiary, the operation that was considered to hold the most promise for the company. In exchange for giving the company a patent that is the basis of the laser operation, Katz was given a 45% ownership stake in the subsidiary.
Sought to Spin Off Unit
Mann contended that Katz has wanted to spin off the laser subsidiary as a separate entity and make it a publicly owned company. Mann opposed the move, he said, because it would not be in the best interest of Helionetics’ shareholders to sell their most valuable holding.
“It would have been good for Bernie, but I thought there were better options,” Mann said. “That’s what led to the rift. . . . Katz wanted me out of the company.”
Katz, however, said the directors voted earlier last month to take the subsidiary public and could have raised the money necessary to prevent the bankruptcy if the sale had been arranged quickly. “The company could have raised the money it needed to stave off bankruptcy,” contended Katz, who owns about 7% of Helionetics’ stock.
Mann’s dismissal and the ensuing charges threaten to plunge Helionetics, which lost more than $22 million in the last 18 months, back into the turmoil that has plagued it for the last several years.
Mann was immediately replaced by William Duke, a Helionetics director and longtime Southern California businessman. Duke once served as president of Compucorp, a Santa Monica office automation maker controlled by Katz.
Shelton said that he and other directors found Mann’s leadership deficient and did not think that he could handle the additional responsibilities of managing Helionetics through its bankruptcy proceedings.
