Brajdas Corp. Reaches Tentative Agreement to Buy 3 Companies

Brajdas Corp., a struggling Woodland Hills-based distributor of electronic components, said it reached tentative agreement to acquire three affiliated electronic companies in Santa Clara for roughly $15.7 million in stock and notes.

The trio of privately owned companies Brajdas plans to buy are ProProm Inc., Koral International Corp. and Adlar Turnkey Manufacturing Corp., and are known collectively as ATMC.

Brajdas--whose principal unit, Cypress Electronics, is also based in Santa Clara--disclosed only a few details of the proposed transaction and its executives declined to elaborate pending a definitive merger agreement.

In a news release, Brajdas did say the acquisition would more than double its annual sales, which were $46.7 million in its fiscal year that ended Feb. 28. The ATMC companies make circuit boards for personal computers, printers and other products, and so would provide an additional source of demand for Brajdas’ components. Brajdas, meanwhile, would give ATMC’s products a wider distribution network.

Brajdas also said the merged companies’ nearby location in Santa Clara would “afford economies of scale and overhead cost reductions” that would boost their performance. It did not say whether that meant layoffs are expected. Brajdas employs about 160 people.

Brajdas said ATMC’s shareholders would get half of their payment in Brajdas stock valued at $1 per share, and the rest in five-year notes. That indicates the deal is valued overall at $2 a share for ATMC holders. If the deal goes through, ATMC holders would own 49% of what would then be Brajdas’ 16 million total shares outstanding.

The deal is conditioned on Brajdas’ current largest stockholder, Barclay & Co. and its affiliates, investing an additional $5 million in Brajdas. The company said Barclay “indicated it will make this investment.” As of June 26, according to Securities and Exchange Commission documents, Barclay owned about 43% of Brajdas.

Barclay is an export/import concern in San Francisco that is unrelated to Barclay’s Bank PLC of Britain, and its president is Donald I. Zimmerman, 51. Zimmerman also is chairman and chief executive of Brajdas. Under the merger proposal, Zimmerman would remain chairman of the newly merged companies and Larry Mendoza, an ATMC principal, would become Brajdas’ president and chief executive.

Brajdas said that after the additional $5-million equity investment by Barclay, Barclay and the ATMC holders would own a combined 88% of Brajdas, and the public would own the balance of the stock.

Moreover, Barclay has lent $17 million to Brajdas that the company has used to pay off bank debt and to cover its day-to-day capital needs.

Brajdas has been hurting recently. In fiscal 1991, it lost $3.2 million after losing $2.2 million the previous year. As of Feb. 28, Brajdas’ net worth--the amount of its assets less its debts--had shriveled to $1.4 million from $4.6 million a year earlier.

The company’s stock, which rose as high as $6.50 a share in early 1989, recently traded below $1. However, at Monday’s close it had climbed to $3 a share in over-the-counter trading in the aftermath of the ATMC announcement.