Troubled Electronics Companies Merge

By P.J. HUFFSTUTTER

Feb. 3, 1998 12 AM PT

TIMES STAFF WRITER

TUSTIN —

Troubled computer service firm Cerplex Group Inc. said Monday that it has agreed to merge with a San Diego rival, Aurora Electronics Inc.

The deal, a stock swap that is expected to close in April, will turn Cerplex into a wholly owned subsidiary of Aurora and help the Orange County firm ease some of its ongoing financial problems, company officials said.

Cerplex specializes in handling electronic repairs, while Aurora focuses on recycling technology and selling spare parts to the computer industry.

“The merger takes two companies that were having financial difficulties and lets them join forces,” said John Thompson, president and chief executive of Aurora Electronics. “Once unified, the hope is that we can create a single company that is fiscally strong.”

The deal is subject to regulatory approval. Once completed, the newly merged companies will operate under the Cerplex name, officials said.

Cerplex, which analysts criticized for expanding too quickly in the early 1990s, has been restructuring its U.S. operations for several years. It sold some units and closed others as it attempted to bring costs into line with revenue.

In 1996, the company cut 400 employees from its payroll, laying off 130 as it closed a Texas operation, and selling an Orange County manufacturing operation with 270 workers to a firm in Salt Lake City.

“We’ve been trying to refinance the business since last year,” said Stephen J. Hopkins, Cerplex’s chief executive. “One of the options was this merger.”

Cerplex stock was delisted about a year ago from the Nasdaq market because the company failed to meet basic financial requirements. The stock, which has been trading over-the-counter, dropped 2 cents Monday, closing at 46 cents a share.

Cerplex has about 1,600 employees worldwide, including about 40 in its Tustin headquarters, Hopkins said. The firm expects to have some layoffs after the deal is concluded. Hopkins insisted, however, that “not many” jobs would be eliminated.

Aurora was delisted from the American Stock Exchange last December after falling below Amex financial requirements. The company’s stock, which also is traded over-the-counter, dropped 34 cents a share Monday, closing at 53 cents.

Aurora has about 250 employees, most of whom work either in the firm’s San Diego or Marina del Rey offices.

Aurora’s principal stockholder--New York-based private capital company Welsh, Carson, Anderson & Stowe--will provide about $33 million in financing to repay Cerplex’s outstanding debt, officials said.

Cerplex posted net income of $1 million, or 3 cents a share, for the third-quarter ending Sept. 30, compared with a $12.9-million net loss, or $1.12 per share, for the same period a year earlier. Revenue was $26.6 million, down from $50.6 million.

Aurora reported a net loss of $52.4 million, or $7.85 a share, for the fiscal year ended Sept. 30, 1997, compared with a net loss of $31.7 million, or $4.44 a share, for the same period a year earlier.

Revenue dropped to $64.9 million from $98 million from a year earlier.

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Cerplex Group Sale

Aurora Electronics and Cerplex Group are merging. A look at the two companies:

CERPLEX GROUP

* Headquarters: Tustin

* Chairman: William A. Klein

* CEO: Stephen J. Hopkins

* Business: Computer services

* Employees: 1,600 worldwide, with about 40 in Orange County

* Status: Public

* Exchange: Over-the-counter