Advisers Hired for Possible Gradco Buyout

TIMES STAFF WRITER

Gradco Systems Inc. said Monday that it has hired financial and legal advisers in connection with a possible management-led buyout of the Irvine-based office equipment manufacturer.

The Irvine firm announced in late September that its chairman, Keith B. Stewart, was pursuing a possible buyout of the publicly held company. In a statement Monday, Gradco reconfirmed that Stewart was still "actively pursuing" a possible buyout.

Gradco, the world's largest supplier of collating and sorting equipment for office copiers, said it has retained the Lodestar Group, a Los Angeles consulting firm specializing in leveraged buyouts, as a financial adviser. The company also said it has hired the Newport Beach law firm of Bruck & Perry as its legal counsel.

Separately, Gradco disclosed that it has been named in a class-action lawsuit filed Oct. 26 in Superior Court in Santa Ana. The suit, filed by Gradco shareholder Moise Katz, alleges that Gradco officers and directors may have breached their fiduciary duties in connection with the Stewart buyout offer, Gradco said.

Gradco officials declined to comment on the suit. Katz could not be reached for comment.

A copy of the suit could not be obtained late Monday.

In a statement, Gradco said "management believes the action to be without merit, and based upon faulty premises. The company intends to vigorously defend the suit."

Gradco also said it has appointed a special committee of the firm's two outside directors to review any buyout proposal. The committee has retained separate financial and legal advisers.

Analysts have speculated that the buyout plan might involve a Japanese bank or investment consortium because Gradco does about one-third of its business in Japan and is a supplier to all of Japan's leading office copier makers.

Gradco made its announcement about the buyout after the stock market closed Monday. The company's shares fell $1.375 per share to $16.75 in heavy trading on the over-the-counter market Monday.

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