Atlantic Research Corp., an Alexandria firm engaged in space and defense-related technology, reported yesterday it has bought out its parent company's 84 per cent interest for approximately $5.7 million. Corporate ownership will be in the hands of 10 members of ARC's management, headed by president Coleman Raphael.
"Being part of Susquehanna Corp. restricted our operations," Raphael said. "We were sort of a maverick that didn't fit well." ARC, which had sales of $25 million in 1976, is a major producer of solid rocket propuision systems. It also is involved in data communications, electromagnetic field measurements and analysis. Eighty per cent of its contracts are with the government or subcontractors.
The announcement capped nearly two years of negotiations during which ARC had been trying to win its independence from Susquehanna, a Denver-based manufacturer of building materials such as plastic pipes and fittings. Susquehanna, which purchased its interest in ARC a decade ago when it was located in Northern Virginia, has had a checkered career involving Securities and Exchange Commission challenges, and stockholder suits resulting from investment losses. No dividends have been paid since 1973.
In 1976, however, Susquehanna turned around under the presidency of Leslie T. Welsh, who was appointed in July. Welsh is also president of Studebaker Worthington, which owns 42 per cent of Susquehanna. Nine months profits in 1976 were $1.8 million, on sales of $78.2 million, compared with a loss of $1.09 million in 1975 on $61.3 million sales.
Under the arrangement announced yesterday, Susquehanna will use the income to pay off accumulated debt and resume dividend payments. The company expects to declare a 25 cent dividend on Class A preferred stock in the first quarter.
Atlantic Research paid Susquehanna $3.2 million cash for its 84 per cent interest. In addition it paid $1 million cash in exchange for a $2.5 million ARC subordinated debenture held by Susquehanna. The company also got another $1.5 million in short and long term ARC notes. ARC arranged financing with the help of a $4 million loan from the National Bank of Washington, $0.5 million from the Bank of Virginia and $1 million from an investment group headed by Allied Capital Corp.
At the same time Susquehanna sold off 421 acres in Gainesville, Va., it owned through a subsidiary, Texas Capital Investments Inc. Selling price was $2.5 million. The property is now, and will continue to be, rented to Atlantic Research.