Parker Resigns as Automotive Corp. Chairman
Parker Automotive Corp. said Wednesday that founder Michael E. Parker has resigned involuntarily as chairman and, in a separate development, the company has laid off 16% of its staff.
In a statement to the company’s board, Parker said that the resignation was “not of (his) own free will” but was intended to allow the company “the chance of a future.” He was unavailable for comment Tuesday.
The announcement came as the company’s stock continued to plunge, closing at $3, down $1.375 in trading on the over-the-counter market. The stock has lost 61% of its value since Nov. 27 and after Parker resigned as chief executive officer because of his legal woes.
The company said it laid off 18 of its 112 workers Monday. Ronald L. Cedillos, chief executive officer of Parker Automotive, said the dismissals were needed to achieve greater manufacturing efficiencies and were not related to the management changes.
The company also revealed that it is seeking new sources of financing. Company officials said its bank-financing commitments “were disrupted” when the company was placed last month in temporary receivership, which has since been lifted.
Cedillos said Parker’s resignation was presented to the board Tuesday and stemmed from a court-sanctioned compromise between Parker Automotive and the creditors of another Parker-founded company, Parker North America Corp.
Last month, U.S. Bankruptcy Judge John E. Ryan ordered the temporary receivership of Parker Automotive at the request of the creditors for PNA, a bank equipment-leasing company that filed for a Chapter 11 bankruptcy in March, 1989. Creditors sought the receivership after charging that Parker improperly funneled $3.5 million from PNA to Parker Automotive.
Ryan agreed to remove the receivership if Parker would relinquish operational control of Parker Automotive. Parker founded the company, which makes fuel-cleaning systems for automobiles, in 1987 and at one time held all of the company’s top posts.
The company confirmed Wednesday that Timothy L. Strader, president and chief operating officer, resigned last month. Strader, who joined the company in September after Parker’s problems surfaced publicly, could not be reached for comment.
Cedillos said that Parker will continue to work for Parker Automotive as a paid consultant, specializing in sales and marketing, and continues to be the majority stockholder. Cedillos declined to say how much Parker will be paid.
“He applied the vision and energy to grow the company from a concept to an actual, bona fide organization,” Cedillos said. “I admire that.”
He added that it is “unfortunate” that problems Parker had in his other company carried over into Parker Automotive. Those problems include a lawsuit filed by Columbia Savings & Loan, which alleges that Parker defrauded the thrift of $13 million. Parker has denied the allegations.
Company officials blamed the drop in Parker Automotive’s stock price on short sellers, investors who take a trading position, betting that the firm’s stock will fall. In a short sell, a trader sells borrowed stock, hoping to buy it back later at a lower price.
The company said “there have been a great many short sellers active in the company’s stock, and that may account for the drop in the quoted price of its shares.” Diane Parker, the company’s spokeswoman and Parker’s sister, said that 158,000 shares of the company’s stock has been sold short, or about 40% of the total shares outstanding.
