General Automation to Settle Back Tax Claim : $2.8-Million Payment Agreed; British Company Will Acquire 32% of Stock

General Automation Inc. in Anaheim said Wednesday it has agreed to pay $2.8 million to settle claims of back taxes from an Internal Revenue Service audit.

Meanwhile, the Orange County computer maker said a British firm has agreed to acquire 32% of General Automation’s stock under the terms of an earlier financial arrangement.

The agreement with the IRS ends a dispute that began in 1985, when the tax agency presented General Automation with a claim for $1.6 million in back taxes, plus $3.6 million in penalty and interest. The assessment resulted from an audit of the company’s 1974 tax filing.

General Automation said it has agreed to pay the IRS $146,000 by June 2, with $2.7 million to be paid in cash and notes over the next 5 years. The firm previously paid about $1.5 million of the original claim, while interest has continued to grow.

In a separate transaction, General Automation Chairman Paul Thompson said that shareholders of British-based Sanderson Electronics have approved an option to purchase 2.9 million shares of General Automation stock.

Sanderson was granted the option in January, along with another purchase right that has not yet been exercised. If the second option is exercised, Sanderson would wind up with a controlling interest in General Automation.

The options were granted in exchange for a $1.75-million loan from Sanderson. The loan provided much-needed cash for General Automation, which reported an $11-million loss for its fiscal 1988 ended June 30.

Sanderson will pay 70 cents for each General Automation share, which was the stock’s market price the day the loan was made. General Automation said it expects to receive payment for the shares within a week, and will use the proceeds as working capital.

General Automation stock closed Wednesday at $1.125 per share, up 12.5 cents in trading on the American Stock Exchange. After the purchase, the firm will have 8.8 million shares outstanding.

Sanderson, which already owns 300,000 General Automation shares, also has an option through June, 1990, to convert the loan into another 2.5 million shares. The conversion would give Sanderson 51% ownership in General Automation.

Sanderson is a reseller of computers that utilize the Pick operating system, the software program that controls a computer’s basic functions. General Automation manufactures Pick-based computer systems.

General Automation, which had revenue of $50.9 million for fiscal 1988, recently reported its first profitable quarter in nearly 2 years. For its fiscal 1989 third quarter, which ended March 31, General Automation had earnings of $103,000, contrasted with a net loss of $622,000 in the year-earlier period. Revenue for the quarter was down 16%, from $13.6 million to $11.4 million.

For the first 9 months of the year, the firm had a net loss of $1.8 million, compared to a net loss of $2.2 million in the same period a year ago. Revenue for the 9 months was $31.2 million, down 16% from $37 million.