GTI Stock Sale May Just Delay Takeover Effort
GTI Corp.’s surprise sale last month of 38% of its outstanding shares to a “white knight” investor from South Africa has untracked two takeover bids by investors who had challenged the management of Chairman James la Fleur.
But GTI’s sale of 2.1 million newly issued shares to William Venter of Johannesburg for $6 million and a 20% interest in one of Venter’s companies, Electronics Supply Corp. (ESC) of Riverside, may have only deferred a takeover.
In a Securities and Exchange Commission filing last month detailing the stock purchase, Venter said he “may in the future seek to control GTI” by acquiring a controlling interest in GTI stock or a majority on the board of directors.
Venter could seek a majority interest in GTI as early as August, 1988, when restrictions will be lifted from the GTI stock purchase agreement that currently bars Venter from acquiring more than 40% of GTI shares.
Corporate control is something Venter, a 52-year-old electronics manufacturer, is accustomed to. According to the SEC filing, he owns majority interests in Altron Corp. and Ventron Corp., two publicly traded South African companies, and several other closely held international concerns including two Riverside-based companies, ESC and Altech USA.
For the time being at least, GTI’s embrace of Venter seems to have saved its management from two unwanted suitors.
John Selzer, executive vice president of Bastian Technologies Corp. of New York, said Bastian has dropped plans to tender for a majority of GTI shares, describing the stock as “overvalued.” In a December letter to GTI management, Selzer proposed a friendly tender offer for 51% of GTI shares at $3.75 per share.
Since GTI’s stock sale to Venter was announced Feb. 6, GTI stock has risen from $4 per share to Monday’s closing price of $5.75 per share in American Stock Exchange trading. When Selzer first informed GTI in December of its interest in making a tender offer, GTI was trading at less that $2.50 per share, he said.
Lee Rust, member of an Orlando, Fla.-based dissident shareholder group that at one point last year held nearly 7% of GTI’s outstanding shares and which unsuccessfully pressed for GTI board representation, last week said his group has sold its GTI holdings and “gone on to other things.”
Rust said his group’s goal of taking over control of GTI management no longer seems realistic in light of Venter’s stock acquisition.
Information on Venter, who did not return a telephone call to his Johannesburg office Monday, was scarce. GTI executives were unavailable for comment Monday. Venter’s attorney, Kenneth Luer of Beverly Hills, refused to comment, saying Venter had made “material disclosures” in the SEC filing.
In the filing, Venter said he plans to seek GTI board representation to help the company expand its operations “through acquisition and internal growth.”
According to the 1985 edition of Who’s Who in South Africa, Venter is a civil engineer by education who was named to the “Top Five Businessmen of 1977” list by Business Times, a South African publication.
The stock sale to Venter was the latest in a series of events at GTI, beginning last summer, that have jolted shareholders. The first occurred in July, when the company announced a $4.1-million second-quarter loss on $4 million in revenues after writing down assets connected to its computer graphics division.
After the challenge by the Rust shareholder group surfaced in July, GTI announced plans to liquidate, saying the company’s liquidated value was almost certainly above the stock market value. In January, GTI did an about-face, calling off the liquidation after having sold off only its computer graphics division for $1.3 million.
