Investor Plans to Double Bridgeport Stake
High Technology Holding Corp., a private investment firm with offices in Santa Ana and Connecticut, said it has proposed a plan under which it would nearly double its stake in publicly traded Bridgeport Machines Inc. and replace most of the ailing company’s directors.
In a letter Monday to Bridgeport’s board of directors, High Technology said it has arranged outside funding that would let the historic industrial machine maker, founded in 1939, repurchase about 40% of its outstanding shares for $10.25 a share--more than double the $4.69 closing price the day the offer was made. At that price, the cost of buying 2.5 million shares--40% of the outstanding stock--would be $25.6 million.
Bridgeport, a major Connecticut-based manufacturer of metal-cutting machinery used in the U.S. and Europe, has seen its stock price steadily erode from a high of $21 in January 1996 as its sales and profits have fallen.
The stock jumped to $8.13 a share in Nasdaq market trading Tuesday after High Technology’s proposal was misinterpreted in some media reports as an offer from the investment company to buy Bridgeport’s shares outright. The stock price fell back Wednesday to close at $7 after High Technology issued a new statement explaining that it was only proposing to arrange financing for a company stock repurchase plan.
As a condition of High Technology’s offer, all of Bridgeport’s board members, except the company’s president and chief executive, Dan L. Griffith, would be required to resign.
High Technology Holdings, which also owns Newport Electronics Corp. in Santa Ana, now has a 10% stake in Bridgeport. The stock repurchase would increase its ownership share to about 18%.
A spokesman for High Technology declined to discuss the offer in more detail. But in its proposal, the holding company said it intends to protect its investment in Bridgeport by placing its own representatives on Bridgeport’s board.
Bridgeport’s earnings have been slumping recently. The company posted a loss of $120,000 for the third quarter ended Dec. 31, compared with a profit of $1.7 million a year ago. Sales fell 28% to $41.9 million from $58.7 million. For the first nine months of its fiscal 1999, Bridgeport earned $490,000 compared to almost $2.5 million for the same period a year earlier. Sales totaled $141.4 million, down nearly 11% from $151.2 million.
In its fiscal 1998, Bridgeport’s profit fell more than 50% to $3.9 million from $8 million the previous year, while sales dropped 6% to $213.8 million from $227.6 million.
Griffith, Bridgeport’s chief executive, has said the company is experiencing a decline in new orders that reflects an overall softening of the world market for metal cutting machinery. He could not be reached Wednesday for comment.
Last year, Bridgeport laid off more than 100 employees as it struggled to match expenses and earnings. The company has about 1,000 employees.
