Control Data Scraps Sale of Ticketron; Analysts Cite Improved Debt Position
Control Data has backed out of a deal to sell its Ticketron unit to Allen & Co., a New York investment banking firm that has been negotiating for the ticket agency since the spring.
Ticketron went on the selling block more than a year ago, when Control Data was mired in debt, in trouble with its bankers, and was targeting assets it could sell--many at bargain-basement prices.
Analysts believe that the Minneapolis-based computer and computer-products maker had accepted a low bid for Ticketron and, now that its debts are under better control, will be in no hurry to sell the ticketing agency, even though it might net a better price.
“Ticketron is profitable, and they need all the profit centers they can get,” said Thomas Crotty, securities analyst at Gartner Group in Stamford, Conn.
Company officials declined to discuss in detail why the sale was called off. However, a Control Data spokeswoman said that of a “couple of sticking points,” one involved delays in getting state government approval to transfer Ticketron’s lottery contracts to the new owner.
Ticketron was the most profitable of the two dozen or so business units that Control Data had up for sale at one point or another. Its six state lottery contracts provide the majority of Ticketron business, although it also does nationwide ticketing for sporting and entertainment events and two off-track betting contracts. Control Data does not break out earnings for its divisions but said that in 1985, Ticketron’s revenue was $121 million and that the operation has been “increasingly profitable since 1982.”
Although no terms were discussed in the final agreement reached in May between Allen & Co. and Control Data, analysts believed that the sale price was just over $100 million.
In the months since the deal was made with Allen, Control Data raised $358 million in a public debt offering and took its Commercial Credit unit public, raising $525 million for 80% of its interest in the unit.
The public debt offering, completed in July, was used to pay off the $350 million in short-term debt that had been a thorn in the company’s side since it went into technical default on the amount in September, 1985. Also, $150 million of the money that it made in the Commercial Credit offering was used to pay down its long-term debt, said Nancy Foltz, a Control Data spokeswoman.
Additionally, Control Data has sold more than 20 of its diverse units since 1984, raising more than $250 million. The company’s total debt stood at $553.5 million at the end of September.
“Since Control Data’s financial restructuring is complete, there is no longer a compelling need to sell Ticketron,” Robert M. Price, Control Data’s chief executive, said in a statement on Wednesday.
At the time that Ticketron was put up for sale, Control Data was “trying to unload any and all assets at distress prices, just to get the bankers off its back,” said analyst Crotty. “And even though Ticketron (was) making money, to bring in money quickly, (the company) probably wasn’t able to get a good price for it. . . . But now, with their finances under control, they probably got tougher in negotiations with Allen.”
In the third quarter ended Sept. 30, Control Data lost $9.3 million, a considerable improvement from the year-ago third quarter, when writedowns and cutbacks contributed to a $255.6-million loss.
