Odetics Seeks IRS Ruling on Spinning Off 2 Units

Anaheim-based Odetics Inc. said Tuesday it has taken preliminary steps toward spinning off two subsidiaries in addition to a previously announced divestiture.

Odetics said it has asked the Internal Revenue Service for a ruling whether the spinoffs would be tax-free.

The company, which previously announced plans to shed its ITS Inc. subsidiary, is now seeking IRS tax rulings for possible spinoffs of its Gyyr Inc. and Odetics Broadcast divisions.

Industry watchers said it is unlikely, however, that the latter two operations are ready to make it on their own.

Odetics “wants to be positioned so that if something happens and they need to spin them off, they can, but I don’t think they’re planning on doing it any time soon,” said Bryant Riley, whose Los Angeles brokerage firm B. Riley & Co. recommends the company stock as a buy.

Odetics Chief Operating Officer Gregory Miner declined to say when the company might divest the operations or which divisions are most likely to go first.

Miner said the IRS could take six to nine months to respond to the letter, which asked whether the company would be eligible to spin off the operations under specific conditions and not be subject to taxes.

Odetics has more than 500 employees in its six divisions, but Miner declined to break down the number of workers by unit.

Gyyr makes television security systems and has been part of Odetics for 26 years. Odetics Broadcast manages videotape facilities for the television industry.

ITS develops transportation systems. Odetics talked about spinning off the division last year but opted to defer it due to market conditions.