Computer Automation Pays Debt

Computer Automation Inc., an Irvine electronics manufacturer, said it prepaid a $1.5-million debenture held by a Kansas businessman who could have converted the debt into common stock at a substantial discount after July 31.

By paying the note before it was due Aug. 30, the company prevented Larry Doskocil of Hutchinson, Kan., from exercising a right to convert the debenture into 600,000 shares at an effective cost of $2.50 each, an 80% discount from Thursday’s closing price of $12.50.

The prepayment ends the company’s relationship with Doskocil, a pizza topping manufacturer who invested $3 million in Computer Automation in 1985 and later sued the company, alleging that it misled him about its financial condition. The suit was settled in 1986.

Computer Automation said the $1.5-million payment was made from internally generated funds, supplemented by a previously announced $1.5-million loan from Sanwa Bank California.