British Firm Loans $1.75 Million in Deal With General Automation

General Automation Inc. said it has completed a financing arrangement that gives a British electronics firm the option to acquire a majority of General Automation’s stock.

The deal with Sanderson Electronics PLC gives struggling General Automation a $1.75-million loan. Sanderson has the option to convert the loan to stock in the Anaheim computer maker. The deal also gives Sanderson warrants to acquire additional stock. If the firm converts the loan and exercises all the warrants, it will control 51% of General Automation’s common stock.

Leonard Mackenzie, General Automation’s vice chairman and chief executive, said Sanderson funded the $1.75-million loan on Tuesday. The money will be used for general working capital, he said.

As part of the deal with Sanderson, General Automation also had agreed to a management restructuring and said it would lay off 65 of its 390 workers--most of them at its facility in England.

Paul Thompson, chairman and managing director of Sanderson, became General Automation’s chairman as part of the restructuring. He said the cost-cutting measures are expected to reduce sales and general and administrative expenses by $2 million a year.