National Presto Industries Inc. is on the verge of acquiring two companies, according to a Milwaukee Journal Sentinel report.
National Presto (Eau Claire, Wisconsin, U.S.) makes small electric housewares as well as adult diapers and ammunition, and the unnamed companies it intends to acquire, according to papers filed in federal court in Chicago, Illinois, U.S., are in the absorbent products and defense industries, not appliances.
The news of the acquisitions is the latest wrinkle in the ongoing National Presto saga. As APPLIANCE reported earlier this week, a U.S. federal judge issued a permanent injunction against National Presto from engaging in interstate commerce and ordering it to register as an investment company.
Presto will appeal and will attempt to have the injunction stayed during the appeal. The injunction could derail the acquisitions, as well as shutter National Presto manufacturing of appliances and halt its ammunition production.
The injunction resulted from a 3-1/2-year long civil suit against the company by the U.S. Securities and Exchange Commission. The suit alleged that since at least 1994 Presto has operated as an unregistered investment company. On October 31, 2005, Judge Charles R. Norgle of the United States District Court for the Northern District of Illinois issued a summary judgment against National Presto, followed by the permanent injunction last week.
Judge Norgle ruled that National Presto was an investment company within the meaning of the U.S. Investment Company Act and found that investment securities as a percentage of National Presto's total assets ranged from approximately 61 percent to 92 percent during the relevant time period. The Investment Company Act defines an investment company as having more than 40 percent of its assets in investment securities, which includes cash and marketable securities. Judge Norgle also ruled that National Presto was not primarily engaged in a business other than investing. Accordingly, it was an investment company and should have been registered with the Commission as such - and should have complied with the provisions of the Investment Company Act.
National Presto accumulated the cash "in an amount in excess of the needs of its operating business," according to the SEC complaint, from sales of subsidiaries in the 1970s and early 1980s. National Presto created National Holding Investment Company, a subsidiary, in 1979, with responsibility for managing National Presto corporate finances.
At the time of the summary judgment, Judge Norgle directed the Commission to submit a proposed Order requiring National Presto to comply with the Investment Company Act as well as a proposed Order of Permanent Injunction.
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