ZZZZ Best Parts With Drexel; Stock Slumps

Only days after its stock surged in the wake of an upbeat earnings projection, shares of ZZZZ Best Co. of Reseda tumbled again Monday after the carpet cleaning firm said it had mutually agreed to part with the investment firm which had been advising it on a major acquisition.

The company declined to say why it had terminated its agreement with the New York investment house of Drexel Burnham Lambert, its adviser for ZZZZ Best’s proposed $25-million purchase of Flagship Services in Newtown Square, Pa., which has a carpet cleaning subsidiary, KeyServ Group.

But Wall Street, which received news of the announcement before the market closed, reacted negatively to the report as ZZZZ Best shares closed at $7.875, down $2.125, in over-the-counter trading Monday.

Analysts said they feared the parting with Drexel Burnham Lambert could jeopardize ZZZZ Best’s proposed acquisition of Flagship Services.

Stock Had Fallen

“This is a time-sensitive transaction,” said Bob Grossman, an analyst who follows ZZZZ Best for the New York investment house Landenburg Thalmann & Co. Grossman said that although he has confidence in ZZZZ Best’s management and that the company’s stock would remain “a strong buy” even if the $25-million acquisition fell through, Drexel’s departure could “slow things down substantially.”

Before release of an upbeat earnings forecast last Thursday, ZZZZ Best’s stock had been tumbling since The Times reported on May 22 that company acknowledged ringing up $72,000 in false credit card charges from November, 1984, to March, 1985. The company said it terminated 12 subcontractors and paid back the charges once they were discovered.

Those disclosures Monday prompted the executive committee of the Carpet Cleaners Institute, a Los Angeles-based trade organization, to recommend expelling ZZZZ Best from the 30-year-old organization.