Lyon Company Acts to Buy Pacific Lighting’s Development Subsidiaries

Newport Beach real estate developer William Lyon and a company in which he owns a major interest have agreed to buy all of Pacific Lighting Corp.’s land-development subsidiaries, including Irvine-based Presley Cos., for $325 million in cash, the companies said Wednesday.

Los Angeles-based Pacific Lighting said the transaction, expected to close in a month, will give it a $12-million profit and end its 18-year involvement in real estate development, which began in 1969 as a diversification move. The company’s principal subsidiary is Southern California Gas Co.

Pacific Lighting announced in March that it was putting its four real estate businesses up for sale. Although its real estate group was successful--earning $24 million in 1986--the company said it was undervalued by Wall Street. Lyon was among seven bidders for the companies, Pacific Lighting officials said.

“We have felt for some time we don’t realize full value for our successful real estate operations in the price of our stock,” said Pacific Lighting Executive Vice President Willis B. Wood.

The utility said it will use proceeds from the sale to expand its gas and oil exploration activities and its retailing business, which it started in 1986 with the $886-million acquisition of the Los Angeles-based Thrifty chain.

Pacific Lighting’s real estate holdings will be sold in two simultaneous transactions. Presley will be bought primarily by Lyon, with a small but unspecified interest in the company shared by Presley Chief Executive Wade Cable and other Presley management personnel.

The remaining Pacific Lighting real estate companies--Blackfield Hawaii Corp., a Honolulu-based developer of single-family homes, condominiums, office buildings and shopping centers; and two Santa Ana-based firms, Dunn Properties Corp., a commercial-industrial developer, and Fredricks Development Corp., which builds and sells apartment complexes--will be sold to Senior Corp., a Miami-based real estate firm.

Two years ago, the William Lyon Co., a major Southern California home-building company in which Lyon is the primary owner, and James D. Harper Jr., a former Continental Illinois National Bank executive, bought Senior Corp. for $141 million. Lyon Co. and Harper each hold a 50% interest in Senior Corp.

Pacific Lighting acquired Blackfield, Dunn Properties and Fredricks Development in 1969. At that time, Woods said, the utility decided to diversify because the post-World War II housing boom in Southern California seemed to be tapering off, along with new demand for gas hookups.

The utility’s last real estate investment came with the purchase of the Presley Cos., founded by Orange County builder Randall Presley, for about $100 million worth of Pacific Lighting common stock.

Lyon, 74, denied Wednesday that his ownership of two major Southern California home-building companies would pose a conflict.

“It is like mixing apples and oranges,” he said, noting that Presley generally builds more upscale housing than the Lyon Co. and has entered different markets, including Albuquerque and Phoenix.

Last year, the Lyon Co. also bought Golden West Homes, a Santa Ana-based mobile home manufacturing company.

Lyon was formerly a principal owner and chairman of AirCal, a regional airline once based in Newport Beach. He denied Wednesday that the pending acquisition will be funded from the approximately $15-million profit he realized last year from the sale of AirCal to American Airlines. He declined to give the source of financing.

However, Presley Cos. President Cable said that a consortium of banks, headed by First Interstate Bank, has agreed to back the deal. Cable said he was “delighted” by Lyon’s leading role in the purchase, noting that he has “a wealth of knowledge and experience in the housing business.”