Wespercorp Plan Gains Initial Approval

Wespercorp, the once vigorous but now ailing computer products maker, said Tuesday that it has reached preliminary agreement with its bank and the holders of its Series A preferred stock to convert almost all of its outstanding debt to equity.

The financial restructuring, if approved by all parties, “should remove the last major outside obstacle to the recovery of the company,” said George Dashiell, who was hired as Wespercorp’s president in 1985 to engineer a financial recovery for the Santa Ana-based company.

“Our ability to survive, prosper and grow will then be in our own hands,” Dashiell said.

Under the agreement, Union Bank would become the company’s major shareholder by exchanging most of the $3.9 million it is owed for 1.9 million newly issued shares of common stock and 200,000 shares of newly created preferred stock. Union would own 33% of the 6.1 million common shares outstanding after the restructuring is completed.

Dashiell also said that Wespercorp has pledged virtually all of its assets to secure the bank debt that would remain after Union accepts the shares.

The plan calls for holders of the company’s Series A preferred stock to exchange it for 1.8 million shares of common stock and 150,000 shares of newly created preferred stock. About one dozen institutional investors own the 500,000 shares of Series A stock and are owed $400,000 in dividends, Dashiell said.

Rapid Expansion

The company, which was founded in 1975 as a designer and manufacturer of equipment for use with computers made by Digital Equipment Corp. and Data General Corp., began expanding rapidly in the early 1980s. In 1982, it was listed as the nation’s 16th-fastest-growing company by Inc. magazine.

The company, which has just 40 employees and a lethargic stock that sells for less than $1 per share when it trades at all, in early 1983 had more than 200 workers and a record high stock price of $22.875 per share.

But competition in the computer peripherals market began taking its toll that year. Wespercorp started posting a string of losses that totaled almost $20 million by the end of the company’s fiscal 1986. For the first nine months of Wespercorp’s fiscal 1987, which ended June 30, the company had lost an additional $1.2 million, Dashiell said Tuesday. The audited annual financial report for the 1987 fiscal year is scheduled to be released by sometime next month, he said.

‘Digital Voice Box’

In a brief interview Tuesday, Dashiell said the company intends to concentrate on its main product lines--controllers for computer tape drives and computer printers. It has also introduced a “digital voice box” that enables a computer to store and repeat audible commands or instructions.

One typical use, Dashiell said, would be in a flight simulator. The computer would monitor the student pilot’s progress and audibly correct mistakes or suggest courses of action.

Wespercorp for several years derived the bulk of its income from a $16-million contract to manufacture and install data communications systems at Federal Aviation Administration facilities across the nation.

Most of that contract has been fulfilled, Dashiell said. While subsequent government contracts are anticipated, the “federal systems” division no longer will be Wespercorp’s primary generator of cash.

Dashiell said the company is looking into developing a new product but declined to be more specific.