Cedco Days Numbered?

by Bridget Kinsella, PW Daily -- Publishers Weekly, 7/27/2005

The doors to calendar and book publishing company Cedco have been locked, perhaps permanently, beginning Monday.

It was the latest in a series of bizarre events at the San Rafael, California, company, which was founded by Charles Ditlefsen in 1978. Ditlefsen could not be reached for comment, but his lawyer, Terrance Hallinan, says that Cedco's 50 employees were laid off and that the company is closed.

Still, Hallinan says he expects he and Ditlefsen, who remains Cedco's largest shareholder, to begin work on a reorganization, even as yesterday a group of minority stakeholders filed an application with the Marin Superior Court to appoint a receiver to step in, whichmay be the company's best hope for survival. The court could decide about receivership as early as today.

Those pressing for a receiver say it is necessary to give someone authority to approve the shipment of Cedco's calendars, most of which are already in third-party warehouses. "The orders are sitting on the Cedco computers and somebody has to transfer them to the fulfillment company [which is outsourced to Jenco]," says Robert Preger, one of the minority shareholders. Since Cedco's primary business consists of calendars, resolution of order fulfillment is extremely time-sensitive. "Every day that passes is dangerous," says Preger.

According to Cedco ex-employees, Ditlefsen had engaged in erratic behavior for as long as six weeks. After calling a company meeting in June to announce his retirement, two weeks later he called another meeting to claim he had avoided a hostile takeover and would stay on as president--and cover payroll himself, if necessary.

The former employees say they were then shocked last Tuesday when the company's human resources manager told them they were laid off and that they should begin cleaning out their desks. Employees say then stormed Ditlefsen's locked office, and they say he reacted by getting very exercised over the actions of the minority stakeholders on a proposed deal to buy the company. The employees also say they have not been paid for two weeks.

Even those who worked closely with the firm say they were surprised. Jock Hayward of Hand Associates, the independent rep group which has sold Cedco products since the company's founding. "I knew [Ditlefsen] wanted to retire, but I thought a buyout had been arranged," says Hayward. "I got the impression that business was going on as usual."