Company Abandoning Sandpoint Adatek Shareholders Approve Deal With Virginia Firm

One of the original tenants in Sandpoint’s airport industrial park will close its doors as early as next month, leaving about 5,000 square feet of office and production space vacant.

Adatek Inc. - for years a company on which economic developers in Sandpoint pinned their high-tech hopes - approved a deal Monday with Charlottesville, Va.-based G.E. Fanuc to sell the licensing for its automation-control software.

Adatek has been an anchor tenant in the industrial park since it opened in 1986. The company, which once employed 20 people, will give up the city-owned leased space “within weeks or months,” said former Adatek President Bill Chambers.

The agreement completes a two-year courting process in which Adatek officials have been trying to convince G.E. Fanuc to buy either the Sandpoint company or the automation technology it has produced in one form or another since 1979.

Some investors, meanwhile, believe the deal could leave them holding stock that never will show a return.

“It’s not a classic case where a large company comes in, embraces the technology, throws millions behind it and moves forward,” Chambers said. “G.E. Fanuc has structured a deal in such a way that they’ve licensed all the technologies and taken over support.”

Along with the software, G.E. Fanuc picked up Chambers, who joined the international company this winter as president and chief executive officer of G.E. Fanuc Asia-Pacific Private Ltd. Co. and now is living in Singapore.

Adatek has been operating with only a couple of employees for the past several months.

At peak employment in the 1980s, it had a team of engineers and manufacturing, sales and support staff for a locally produced line of automation hardware. That staff was scaled down when the company changed its focus to software development in 1990.

In the near term, one of the remaining Adatek employees will be in charge of providing “secondary support” for technical questions G.E. Fanuc staff can’t field from Charlottesville. That position, too, is expected to be absorbed under the licensing agreement.

“I think what Adatek is going to do is cease operations and put itself into a liquidation trust,” said Chambers.

About 200 shareholders will receive payments from the trust, he added, with funds coming in the form of royalties paid by G.E. Fanuc as it sells the software technology to new industrial clients.

Adatek’s automation software is running in “thousands of applications in big-name companies around the world,” Chambers said, including Nestle, Sony, Upjohn, 3M and Monsanto.

Over the years, many Adatek employees took advantage of stock options in the privately held company, banking on healthy returns if the small firm were acquired by a major corporation. But those shares were diluted when Adatek took on preferred shareholders to raise capital.

Longtime Sandpoint businessman Ward Tifft was one of only three shareholders attending Monday’s meeting. While turnout was slight, enough proxies were mailed in to pass the proposed deal, Tifft said.

Of the 63,000 shares he started with, Tifft ended up with 6,000 after preferred shares were factored in.

“They did a 10-for-1 reverse split,” he said. “It’s amazing what happens when you move that decimal point over just one little place.”

Chambers said common shares could do as well or better than preferred shares, depending on “how well the technology performs from here on out.”

But Tifft has lower expectations for his Adatek stock.

“They’ve got $360,000 to pay off in back wages and no indication there’s going to be anything left for anybody,” he said, adding that the nature of investing requires a win-some, lose-some attitude. “There were lots of promises and lots of hopes, but it didn’t turn out that way.

“I can always write it off on my income tax.”

, DataTimes MEMO: This sidebar appeared with the story: ADATEK Adatek has been an anchor tenant in the industrial park since it opened in 1986. The company will leave about 5,000 square feet of office and production space vacant.