Presto files papers with SEC

Manufacturer reluctantly registers as investment company

By DORIS HAJEWSKI
dhajewski@journalsentinel.com

Posted: Dec. 27, 2005

National Presto Industries Inc., the Eau Claire-based manufacturer of small appliances, adult diapers and ammunition, has filed papers with the Securities and Exchange Commission to register as an investment company.

The company said it was filing the documents after a federal judge in Chicago denied Presto's motion to stay an injunction ordering Presto to register.

U.S. District Judge Charles Norgle earlier this month ordered Presto to stop doing business as long as the company was operating as an unregistered investment company. On Oct. 31, Norgle ruled against Presto in a lawsuit by the SEC that said Presto has been operating illegally as an investment company for at least the past decade.

The SEC lawsuit was filed in 2002. Before that, Presto was the target of years of criticism from shareholders and analysts for sitting on a huge stash of cash that at one time totaled more than $225 million. The money was accumulated during the 1970s and 1980s from the sale of subsidiaries.

In a summary judgment, without a trial, Norgle found that Presto was an investment company because more than 40% of its assets were in cash and marketable securities.

The Investment Company Act of 1940 requires companies that fit the definition to register with the SEC as investment companies and follow regulations that apply to such businesses.

Presto is appealing the decision. After losing the case, Presto restructured its assets and says that it now is below the 40% threshold to qualify as an investment company.

In its motion asking the court to hold off on the injunction, Presto said it would be irreparably harmed if forced to shut down operations.

The company also said that two pending acquisitions of businesses in the defense and absorbent products industries would be in jeopardy if it could not close the deals next week as planned.

In announcing on Friday its plan to register with the SEC, Presto said that it still hopes to buy the companies, but that the court's ruling would delay the planned Jan. 3 closing date.
 

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