Restructuring plan to create slimmer MagneTek: it may sell off six operations, reduce size by one-third.

MagneTek Inc., a Los Angeles-based manufacturer of electrical equipment, has announced a restructuring that could reduce the size of the company by almost one-third.

The company, which in its last fiscal year had net sales of $1.5 billion, said as many as six business groups could be sold as part of the reorganization. The groups that may be sold accounted for about 29 percent of the company's fiscal 1993 revenues, according to the company.

If all six business groups are sold, worldwide employment could be reduced from 15,000 to between 11,500 and 12,000 workers, company spokesman Robert Murray last week. He said employees would not be laid off, rather they would become part of other companies.

MagneTek's headquarters is on Santa Monica Boulevard but most of the company's 60 manufacturing and service facilities are outside of Southern California. However, the company does have some production facilities in Simi Valley, Gardena and Anaheim.

At least one of the groups that could be sold -- the power technology systems division -- has facilities in Anaheim.

Investors have reacted favorably to MagneTek's restructuring, which was announced on Jan. 6.

The company's stock, which is traded on the New York Stock Exchange, has increased in price about 10 percent since the announcement. Last week MagneTek's stock was trading in the $16.50-a-share range compared to a 52-week high of $25.50 and a 52-week low of $12.25 per share.

Wall Street analysts who follow the company generally applauded the restructuring.

"It's going to be a difficult task to sell off all those divisions," said Timothy Reiland, an analyst who follows the company for Cleary Gull Reiland, an investment company in Milwaukee. "It's going to be difficult for the company because it is going to significantly change the company but it is absolutely the right thing to do."

He said some of the groups earmarked for sale are unprofitable and therefore could be difficult to sell. Reiland estimated the restructuring could take many months to complete.

MagneTek, in its announcement, said it hoped to complete the restructuring by the end of the year.

In its last financial report, covering the fiscal first quarter ended Sept. 30, MagneTek reported net sales of $379.6 million compared to $335.7 million for the same 1992 period. Net income for the period was $1.4 million vs. a $41.9 million loss a year earlier. The company said the loss was due to accounting changes. For the fiscal year ended last June 30, MagneTek had net sales of $1.5 billion compared to $1.2 billion for the prior 12-month period. It reported a net loss of $21.7 million vs. a net profit of $22.1 million a year earlier.

Under its restructuring plan, divisions that could be sold include electrical services, utility and power products, component transformer and converters, power technology systems, controls and insulation.

In the company's statement, MagneTek Chairman Andrew Galef said, "All of these business groups are profitable, commanding substantial shares of their respective markets."

The result of the possible sale of the six business groups will allow MagneTek to concentrate on its core businesses, said Murray, the company spokesman. Those core businesses would include lighting products, electrical motors and generators, adjustable speed drives, distribution transformers and commercial power supplies.

Murray said the restructuring could reduce MagneTek's debt from $530 million to $275 million.

"Our primary purpose in the restructuring is to bring a tighter focus on the company's products and to concentrate management and research and development on fewer products and fewer markets," said Murray.

In its statement, MagneTek said it will take a charge against earnings of an amount not to exceed $60 million for the cost of the reorganization. The charge will be figured into the fiscal second quarter results that will be announced later this month and cover the three months ended Dec. 31.

Galef said the company expects to return to profitability in its fiscal third quarter, which ends March 31. He said the net gain from the restructuring is expected to exceed the charge of the restructuring.

MagneTek was formed in 1984 and currently has manufacturing and service facilities throughout the United States, as well as operations and offices in Europe, Southeast Asia and in Japan.