Computer Maker Will Sell Stock to Raise Needed Cash
In a move that could pump up to $6.6 million of badly needed cash into financially troubled General Automation Inc., the Tustin computer maker said Thursday that it will sell 1.5 million shares of its common stock to the public at $4.50 apiece.
General Automation officials declined to comment on the offering. However, according to documents filed with the Securities and Exchange Commission, $4.7 million of the proceeds will be used to pay off various notes, including nearly $1 million owed to the Internal Revenue Service.
The balance of the proceeds, which is expected to net between $5.7 million and $6.6 million--if an underwriter’s allotment of 225,000 shares is exercised--will be used for working capital and for development of the company’s Zebra microcomputer line.
No Selling Shareholders
After the offering is complete, the number of General Automation shares outstanding will have increased 45% to 4.8 million from 3.3 million shares. There are no selling shareholders, the company said in a statement.
For the nine months ended May 3, General Automation reported a net loss of $4.5 million, compared with a loss of $6.7 million a year earlier. Revenues during the nine months fell 43% to $24.8 million, from $43.7 million in 1985.
With its losses totaling more than $30 million since 1981, General Automation recently took steps to restructure its computer manufacturing operations and eliminate debt. In July, the company renegotiated $15 million in bank debt, leaving only $1.3 million in long-term debt and about $2 million in other debt outstanding.
Will Sell Rights to Line
General Automation, which previously said it planned to concentrate solely on its Zebra family of business computers, said in SEC filings that it will sell to an unidentified company the manufacturing rights, inventories and engineering documents relating to its line of mini-computers.
The sale, to a privately held Orange County concern, is expected to become final Monday, according to SEC filings. Additionally, the company has agreed to sell assets of its mini-computer software business in Germany to a firm based there. The transactions are expected to garner $350,000 in cash and notes.
