SAN DIEGO — Oak Industries, awash in debt and near bankruptcy last year, began a comeback bid Tuesday by agreeing to acquire the Quartz Crystal Components Group of New York-based Electronic Technologies for an undisclosed amount.
When the deal is completed, San Diego-based Oak will acquire three Electronic Technologies businesses that last year reported revenues of $18.7 million.
The acquisition will "greatly enhance and broaden the scope" of Oak's existing McCoy Electronics operation, according to Oak Chairman E. L. McNeely. He described the acquisition as "the first step of our strategic plan to restructure Oak around its core companies."
Included in the acquisition are Croven Crystals Ltd. a Canadian company located in Whitby, Ontario, that manufactures precision quartz crystal components; Houston Electronics, a Kane, Pa., manufacturer of hermetically sealed glass-to-metal enclosures for the quartz crystal industry, and Ovenaire-Audio-Carpenter, a Charlottesville, Va., company that manufactures crystal oscillators for the telecommunications and defense industries.
Oak finished 1985 with $230 million in debt and a negative net worth of $70 million. But earlier this year, Oak successfully retired $195.5 million of its $230 million in outstanding debt and, with proceeds from the sale of a profitable materials division to Allied-Signal, boosted its net worth to a positive $65 million.
The company also accumulated $125 million in tax-loss carry forwards and more than $45 million, which McNeely plans to use to finance a string of acquisitions.
Initial acquisitions will "build upon our core businesses," McNeely said Tuesday. "But the second tier of our plan calls for acquisitions outside of our core businesses."
Oak has targeted "smaller companies with between $15 million and $75 million in revenues," according to McNeely, who quipped that while Oak "won't be buying a brassiere company or a chocolate factory,
we'll eventually start looking beyond our core businesses."
McNeely, former chairman of Wickes Cos., became Oak's chairman in November, 1984, just as the company's financial problems were hitting their lowest point. It reported a $3.3-million net loss for the three-month period ended Sept. 30, compared to an $11 million loss during the same period during 1985.
During the early 1980s, Oak built itself into a high-flying diversified media company with interests in manufacturing, television stations and a subscription television service. By 1985, however, a recession and financial pressures from Oak's own ambitious expansion plans had generated more than $300 million in losses, resignation of its top executives and subsequent Securities and Exchange Commission and shareholders lawsuits.