Micom Plans Buyback of Its Shares for $144 Million
Micom Systems announced plans Wednesday to spend $144 million to buy back nearly half of its stock, including the shares held by three dissident directors who were instrumental in building the computer communications equipment company.
Micom said it will buy 9 million of its 18.6 million shares outstanding for $16 each, including a total of 4.2 million shares held by the company’s founder, William A. Norred of Encino, and its largest shareholders, investors John M. Thornton and Sally B. Thornton of San Diego. Micom said the remaining 4.8 million shares will be bought on the open market, also for $16 each.
Founded in 1973 by Norred, Simi Valley-based Micom in the early 1980s was one of Southern California’s fastest-growing high-tech companies. Its stock hit a high of nearly $50 a share in early 1984.
But Micom was hit hard by the computer industry slump in 1985. Its stock sold for $6.50 as recently as last fall after the stock market crash. The stock closed at $12.125 a share Wednesday in over-the-counter trading, unchanged from Tuesday.
Three to Leave Board
The company did not say how many of the 4.2 million shares it plans to buy from the dissident directors belong to Norred and how many belong to the Thorntons. But a proxy statement from last July said the Thorntons owned 2.4 million shares then, while Norred owned 1.9 million.
Raymond V. Thomas, Micom’s chief financial officer, would not elaborate on the differences between the three dissident directors and Micom’s seven other board members, other than to say they were over general strategic matters. Upon the sale of their shares, which is expected to take place in April, Norred and the Thorntons will step down from the board.
Thomas said the company, which puts its debts at $6 million in financial documents, will have to borrow heavily to finance the stock repurchases. He said the company has $55 million in cash and short-term securities, although more than half of the money is tied up for some time in Puerto Rico as part of a program in which it receives tax breaks for investments made there.
Securities analysts speculated that the differences may have been over Micom’s languishing stock price or over its recent purchase of Spectrum Digital of Herndon, Va., for $19.4 million in cash and stock. Some analysts believe that Micom paid too much.
Profits Up
Norred, 47, stepped down as chief executive in 1985, when he was succeeded by Roger L. Evans, and he resigned as chairman Jan. 1. He now develops real estate, recently proposing an 1800s-theme resort campground in eastern Ventura County estimated to cost $20 million to $30 million. Norred could not be reached for comment.
John Thornton, 56, is chairman of Wavetek in San Diego and was one of several investors who provided Micom a much needed infusion of funds in 1976 after one of its major customers filed for bankruptcy. Neither Thornton, who previously served as Micom’s chairman and vice chairman, nor his wife, Sally, could not be reached.
In the nine months ended Dec. 31, Micom earned $5 million on sales of $159.5 million, up from a profit of $884,000 on sales of $145.6 million a year earlier.
