Texas Company Gets Controlling Interest in Parker : Contract: Founder gives up involvement in the firm. Board majority will be replaced by new directors chosen by Remington Cos.

After a week of haggling over founder Michael E. Parker’s future role with the company, Parker Automotive Corp. and Remington Cos. of Dallas said Thursday that they have signed a pact giving the Texas firm controlling interest in Parker.

Under the agreement, Michael Parker has resigned from Parker Automotive’s board and ended his involvement with the company. He also turned all of his stock voting rights over to Remington chairman and owner Connie Charles Armstrong Jr.

A majority of Parker Automotive’s board has resigned and will be replaced by new directors chosen by Remington Cos. Armstrong will become the company’s new chairman.

Armstrong wouldn’t say how much money he plans to invest in Parker Automotive, but in an interview Wednesday he said that his firm already has pumped more than $1 million into the company and that much more will be forthcoming.

The agreement calls for Remington to pump “a substantial amount of cash” into Parker Automotive in return for notes and warrants convertible to common stock.

When the financing is completed, Remington will own two-thirds of Parker Automotive’s stock, Armstrong said. Remington also has an option to acquire 2.2 million shares of Parker Automotive stock owned or controlled by Michael Parker at a price of $6.50 per share. The company’s stock closed Thursday at $4.25.

Armstrong said he also will serve as Parker’s chief executive and plans to move to Orange County immediately. He said he intends to head the company for “eight to 12 months” before returning to Texas.

Parker Automotive, which manufactures automotive fuel cleaning systems, will keep its headquarters in Costa Mesa. Armstrong said the fate of its 60 employees is undecided, although some jobs will be eliminated.

Armstrong described the deal as a last-ditch bid to keep Parker Automotive from going bankrupt.

Armstrong said the company had been unable to meet its payroll and was in default on its bank loan in January when he proposed the deal.

After opening negotiations with the company’s directors, Armstrong said he deposited $380,000 cash in Parker Automotive’s bank account so the company could pay its employees.

He said Remington is one of four holding companies he owns that specialize in turning around ailing companies. Armstrong, who is in his mid-30s, said he got started as a corporate turnaround specialist during the Texas real estate and oil industry collapses in the early 1980s.

Parker Automotive’s troubles came to a head in November, when it was placed in receivership at the urging of the creditors of bankrupt Parker North America Corp., another company founded by Michael Parker.

Although the receivership was lifted after two weeks, it combined with publicity about Michael Parker’s potential civil and criminal problems at Parker North America to scare away the bank that had been extending credit to Parker Automotive, Armstrong said.

Among other things, a bankruptcy examiner’s report claims that $7 million that Columbia Savings & Loan Assn. in Beverly Hills gave to Parker North America to invest in equipment leasing deals was diverted to Michael Parker, Parker Automotive, other members of the Parker family and to various business associates of Michael Parker. Columbia Savings has sued Michael Parker for fraud.

Michael Parker has denied any wrongdoing in connection with his activities at Parker North America, a bank equipment leasing firm in Irvine.

But when the bankruptcy judge overseeing the Parker North America case ordered a receiver to take charge of Parker Automotive, its bank “accelerated its notes and sent a letter to all of Parker’s Automotive’s customers telling them to make their payments directly to the bank,” Armstrong said. As a result, Parker Automotive’s cash flow was cut to almost nothing.

“The company has a good product,” Armstrong said. “Its problem is that Michael Parker’s past problems caught up with him.” Armstrong said that he was not passing judgment on Parker but that the company’s chances for continued financing were bleak as long as Parker remained in charge of the firm.

In a brief phone interview earlier this week, Parker said he had agreed to leave Parker Automotive and turn voting control of his stock over to Armstrong in order to save the company.

Armstrong said in the interview Wednesday that one of his first moves as chairman will be to bring in an attorney to review the dozen or so distribution contracts Parker Automotive has with firms in the United States and Europe.

“We looked at some of them, and the contracts were vague,” he said. “It was not clear whether they called for the distributors to pay when they obtained products from Parker or when they finally sold it.”