Gradco Systems, Plenum Inc. Prepare for Proxy Fight

On the eve of a shareholders’ proxy fight, officials from Gradco Systems Inc. and a New York City publishing company that is trying to oust Gradco’s management prepared to wage a last-minute battle of the hotel hospitality suites.

Plenum Publishing Inc. and Gradco entertained shareholders Thursday in separate hospitality suites on the ninth floor of the Panache Club at the Hotel Le Meridien in Newport Beach. At 10 a.m. today, the two sides will take their proxy battle downstairs for Gradco’s annual shareholders meeting.

Gradco is an Irvine-based manufacturer of sorters for office copiers and computer printer products. Plenum is a small New York publisher of technical journals that owns 9.4% of Gradco’s stock.

Plenum Chairman Martin E. Tash arrived in Newport Beach Wednesday with a contingent of supporters to meet with shareholders and seek support for Plenum’s proposed slate of candidates for Gradco’s board.

“I think it will be a long day tomorrow,” Tash said, “the culmination of a very hectic fight.”

Keith B. Stewart, Gradco’s chairman, is also wooing supporters for the company’s proposed slate of directors, including reserving a VIP suite at the hotel. Newton Lee, Gradco’s corporate secretary, wouldn’t comment on management’s strategy for the annual meeting.

Plenum went public with its proxy fight in August after Stewart abruptly postponed Gradco’s annual meeting on learning that Tash and Plenum had planned to nominate their own slate of directors.

Plenum filed a lawsuit in August alleging that Stewart and management tried to misappropriate company assets by awarding themselves warrants to buy shares in the company’s profitable Gradco Japan subsidiary at below-market prices.

In response, Stewart has written letters to shareholders contending that the transaction was necessary to persuade Japanese financiers to invest in the subsidiary. He has also offered to boost the value of Gradco’s stock by spinning off the company’s unprofitable printer systems subsidiary.

Gradco officials have contended that the company is better run by its current management, arguing that Tash is unfamiliar with the company’s technology.

Tash, in turn, has said that the directors he has chosen are experienced managers who would run the company responsibly and enhance shareholders’ value.