MAI Basic Four disclosed Wednesday that two of its principal owners intend to sell their combined 43% stake in the Tustin-based computer manufacturing and service company.
Wall Street apparently welcomed the news. MAI's shares jumped $3.875 per share Wednesday to close at a 52-week high of $19 per share, a gain of 26%. The stock was the biggest percentage gainer on the New York exchange.
MAI said that Bennett S. LeBow, MAI's chairman and largest stockholder, and William Weksel, an MAI director, have notified the company of their plans to sell their shares.
LeBow, a New York businessman who often invests in troubled or out-of-favor companies, acquired MAI in 1985 for $105 million in a leveraged buyout.
MAI manufactures, markets and services computers sold to small and medium-sized businesses. It has more than 4,500 employees and more than 40,000 customers in 39 countries.
MAI said it has retained Drexel Burnham Lambert, a New York investment firm, to advise the company on the stock sale and to help locate interested buyers.
William B. Patton, MAI president and chief executive, said in a prepared statement that MAI plans to "develop a program to accomplish (the stock sale) in a manner which is in the best interests of the company and all of its shareholders."
MAI treasurer Michael L. Veuve said Drexel Burnham "will put together a plan for a sale of those shares." He said the company has no plans to buy back the stock itself.
Veuve said the company is confident it will find investors willing to buy LeBow's and Weksel's interests. "We believe the company and the stock are attractive," he said.
Although LeBow holds the title of chairman, he does not maintain an office at MAI's Tustin headquarters and "does not partake in day-to-day operating decisions," Veuve said. As company directors, LeBow and Weksel "participate in strategic decision-making," he added.
MAI said that neither LeBow nor Weksel have indicated any dissatisfaction with the company's direction.
"There's been no indication of any disagreement with our strategic plans," Veuve said. "They've consistently endorsed the strategic plans of the company. And our financial performance has been excellent."
In its latest quarter, the company reported earnings of $6.3 million, a 16.5% increase over the year-earlier period, on revenues of $105.36 million. For its fiscal year ended in September, MAI had earnings of $22.8 million on revenues of $321 million.
LeBow owned 37% of MAI's stock and Weksel owned 5.5% as of December, 1987, Veuve said. The LeBow family controls another 17% of MAI's stock in trust funds, but that stock is not included in the 43% interest to be put up for sale, Veuve said.
A secretary at LeBow and Weksel's New York office said both men were out of town and unavailable for comment.
LeBow is a controlling stockholder in several companies, including New York-based LeBow Industries, a company that provides management and financial consulting services to businesses in which LeBow invests. Weksel is president of LeBow Industries.
In 1986, LeBow bought Liggett Group Inc., a Durham, N.C., cigarette manufacturer, for $137 million from Grand Metropolitan, a British conglomerate.
In 1984, Management Assistance Inc., then the parent company of Basic Four Corp., was the target of a hostile takeover by Asher B. Edelman, a New York investor. After buying Management Assistance, Edelman sold off pieces of its business, with LeBow acquiring the computer manufacturing unit, now known as MAI Basic Four.
Immediately after buying MAI Basic Four in January, 1985, LeBow fired its former president and three other top executives, laid off about 10% of its worldwide work force and sold its Canadian operations.
In January, MAI Basic Four acquired two former Management Assistance operations that were sold off after the Edelman takeover. The company paid $146 million to repurchase MAI Canada Ltd. and the MAI Basic Four computer maintenance operations of Sorbus Inc.
Weksel, who served as MAI Basic Four's acting chief operating officer for six months after LeBow acquired the firm, was formerly chairman and chief executive of Information Displays, a bankrupt computer graphics company.
In August, 1986, Weksel and another Information Displays executive settled Securities and Exchange Commission charges that they fraudulently inflated the New York firm's earnings and sold personal stock without disclosing information about the company's deteriorating financial condition.
In a consent agreement, Weksel agreed to turn over $208,000, the amount of potential stock losses he allegedly avoided by selling out before news of Information Displays' problems reached the market. Neither Weksel nor the other executive admitted wrongdoing.