Pacific Diversified Agrees to Sell Wahlco Systems to New Investor

Wahlco Environmental Systems Inc., the financially troubled designer and maker of air pollution control and power efficiency equipment, said Monday that its majority shareholder agreed to sell its 81% stake in the company to a new investor.

The price that Wexford Capital Corp. paid for the shares owned by Pacific Diversified Capital Co. was not disclosed.

Wexford will assume $5 million of the $25 million debt that Wahlco owes to Pacific Diversified, and it will provide Wahlco with $2 million in financing for working capital, which is to be repaid in three years.

Wexford agreed to close the deal by May 15. Wahlco said that, if the transaction is not completed by then, it would seek other ways to secure working capital.

Wahlco had a similar deal terminated last month when a different, unidentified lender reached an impasse while in negotiations with Pacific Diversified. Last year, Wahlco posted a loss of $66.1 million--nearly equal to its revenue.

Wexford Capital Corp., based in Greenwich, Conn., is the general partner of several investment partnerships.