Besteel Industries to Merge With Modtech Inc.

Modtech Inc., a Perris-based manufacturer of modular classrooms, announced Wednesday that it has signed a letter of intent to merge with Besteel Industries, an Irvine company that builds modular structures for prisons and the petroleum industry.

Chief executives of the two companies issued a joint statement saying that the merger would give both companies a boost by providing economies of scale and would provide each with manufacturing facilities closer to untapped markets. The statement said the companies hope to complete the merger by the first half of 1993. Company spokesmen were unavailable for comment.

Modtech’s sales have been declining, falling 25% to $35.6 million for 1991 from $47.6 million for 1990. For the third quarter, the company posted a profit of $27,000, or 1 cent a share, contrasted with a loss of $338,000, or 9 cents a share, for the same period a year earlier. Quarterly sales came to $10.9 million, up slightly from $10.8 million.

Besteel Industries is privately held.