Gradco Stock Dips 12% as Buyout Bid Drags On

IRVINE — Gradco Systems Inc.’s stock was sharply lower in heavy trading Thursday, stirring speculation that Chairman Keith B. Stewart’s buyout bid for the Irvine maker of office copier parts has run into problems.

Gradco’s stock, which is traded over the counter, closed at $13.875 per share, down $2.375, or 12%. The stock climbed as high as $19 after the buyout announcement two months ago, but has dropped off as Gradco management has failed to complete the deal.

“I think he (Stewart) is having trouble finding financing for the buyout,” said Jeff Kilpatrick, president of Newport Securities Corp., a Costa Mesa brokerage. “In the current financial environment, management buyouts have not been as popular in the financial community as they were just a few months ago.”

In late September, Stewart, who is also Gradco’s founder, announced that he was pursuing a possible management buyout of the world’s largest independent supplier of paper feeders and sorters.

Since then, however, the company has said little about how the buyout is progressing. Gradco officials did not return phone calls concerning Thursday’s stock activity.

Kilpatrick speculated that arbitragers--investors who specialize in takeover or buyout stocks--are losing patience with Gradco and are selling off the stock to pursue other deals.