GREENWICH, Conn. -- Directors of Penn Central Corp. have approved a plan to spin off to shareholders its newly formed Sprague Technologies Inc. subsidiary, the company said Thursday.
At the time of the spin-off, Sprague will own the electronic components business currently conducted by Penn Central's Sprague Electric Co. and Solid State Scientific subsidiaries.
'The company's analysis of the spin-off proposal confirmed the board's earlier judgment that the company's electronic components business is not consistent with Penn Central's long-term strategic goals,' said Carl H. Lindner, chairman and chief executive officer.
Lindner told the company's annual meeting that Penn Central will distribute one share of Sprague for each two of the parent's currently outstanding shares in what is expected to be a tax-free transaction. Penn Central plans to keep about 6 percent of the shares of the electronics unit.
A preliminary statement likely will be filed next week with the Securities and Exchange Commission and mailed to Penn Central shareholders in June.
The spin-off should be completed in July after formal declaration of the distribution by Penn Central's board.
'The board of directors believes the distribution of (Sprague) stock to Penn Central shareholders at this time will have a greater potential for increasing the long-term value of shareholders' investment,' he said.
As previously announced, Edward F. Kosnik, former executive vice president and chief financial officer of Penn Central, was named president and chief executive officer of Sprague Technologies.
John L. Sprague was named executive vice president of Sprague Technologies and will continue as president of Sprague Electric Co., which will be the spin-off's principal operating subsidiary.
Penn Central makes products and supplies services in the areas of electronics, telecommunications, defense and energy.