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Flamemaster Corp., turning up the heat under Hydro Flame Corp., last week announced that it has raised its stake in Hydro Flame from 6.8% to 8.5%, and said it remains interested in a merger

or other alliance with the company. However, Hydro Flame, a Salt Lake City maker of recreational stoves and housewares, has reacted coolly to the overture from Flamemaster, a Sun

Valley-based producer of flame-retardant coatings and sealants. After Flamemaster disclosed its initial investment a month ago, Hydro Flame President Von Whitby said his company had “no

interest” in teaming with Flamemaster, and Whitby said Monday that position had not changed. Joint Marketing Plan If Flamemaster managed to acquire Hydro Flame, it would be a case of the

gnat swallowing the elephant. Hydro Flame’s $30 million in annual sales are six times those of Flamemaster’s. In an interview last week, Flamemaster President Joseph Mazin said a merger is

not Flamemaster’s only goal. His company also is looking at a possible joint marketing deal that could call for Hydro Flame to sell Flamemaster’s fire-retardant coatings to buyers of Hydro

Flame stoves, such as manufacturers of recreational vehicles. Mazin said that although his company still wants an alliance, Flamemaster remains interested only in a friendly deal. In the

meantime, the company considers its Hydro Flame stake an investment, he said. Flamemaster’s balance sheet appears strong enough to finance an acquisition the size of Hydro Flame, whose

market value is about $2.9 million. As of June 30, Flamemaster had no long-term debt, and its current debt (bills due within a year) was only one-fifth its $2.5 million in current assets

(cash, securities and receivables due within a year). In a filing with the Securities and Exchange Commission, Flamemaster said it owns 82,494 of Hydro Flame’s 972,600 total common shares

outstanding, up from its original 66,137 shares. Flamemaster said it bought the added 16,357 shares at $2.25 to $2.88 a share. Hydro Flame closed Monday at $2.94 a share; Flamemaster

finished at $2.88. Both are traded over the counter. Profit Falls In a separate matter, Flamemaster said its fiscal fourth-quarter profit fell 13% from a year earlier as revenue dipped 4% to

$1.58 million from $1.65 million. Net income for the quarter ended Sept. 30 fell to $119,654, or 11 cents a share, from $138,270, or 10 cents a share, a year earlier. Per-share results rose

even though overall net income fell because the company had fewer shares outstanding in the latest period. The drop reflected a cut in a Defense Department contract for Flamemaster to

provide sealants for aircraft, Mazin said. When the contract was renewed in April, it was reduced to $600,000 for the current fiscal year from $2.4 million the previous year, he said. Still,

the previous contract helped Flamemaster post a 42% higher profit for its fiscal year ended Sept. 30. Profits rose to $442,772, or 45 cents per share, from $311,020, or 32 cents per share,

in fiscal 1986. Its annual revenue rose to $5.8 million from $5.1 million. MORE TO READ