The Securities and Exchange Commission reportedly is investigating whether MAI Basic Four Inc. in Tustin violated federal stock margin rules in its hostile bid for Prime Computer Inc. in Natick, Mass.
An MAI spokesman confirmed that SEC investigators questioned executives about the value of collateral the company pledged to finance the takeover offer, according to a published report today. MAI Basic is offering $20 a share for Prime in a deal that values the Natick minicomputer maker at $970 million. The Boston Globe said congressional sources told it about the SEC investigation into the takeover bid. SEC spokeswoman Mary McCue today declined to comment on the report.
The Federal Reserve sets margin rules to limit the amount of unsecured debt used to back the purchase of stock. Stock has been pledged to back loans of nearly $1.5 billion that MAI would use to buy Prime. "We've had informal, cordial and cooperative discussions with SEC staff," an MAI spokesman said. "We've answered all of the questions they've asked of us. And as we previously stated in our offering documents, we believe our offer complies with all margin rules."