Tustin Firm’s Bid for Prime Remains Barred : Judge Says MAI’s Disclosure Still Inadequate, Won’t Lift Injunction

A federal judge in Boston on Tuesday refused to lift an order barring MAI Basic Four’s $1.3-billion hostile bid for Prime Computer, saying that financial disclosures made by MAI are still inadequate.

Judge A. David Mazzone said he would not lift the injunction on MAI’s $20-a-share offer until MAI provides Prime shareholders with audited 1988 financial results for its investment firm, Drexel Burnham Lambert. The injunction would be lifted 10 days after that information is supplied.

The injunction has prevented MAI, a Tustin computer company, from proceeding with its tender offer for Prime, a Natick, Mass., minicomputer maker. The offer has been enjoined since Dec. 9, when Mazzone ruled that Drexel’s involvement in the offer is so significant that the investment firm should be considered a co-bidder and should be required to disclose financial information.

Information by May 1

Officials for MAI said during Tuesday’s hearing that the company should be able to provide the information requested by Mazzone by May 1.

Both parties in the 5-month takeover battle said they viewed Mazzone’s ruling as a victory for their side.

Toni Lee, an MAI spokeswoman, said the company is “delighted” by Mazzone’s decision to allow MAI to proceed with its offer once information about Drexel’s 1988 financial results is provided.

Lee said MAI is also encouraged by Mazzone’s decision to deny a motion for an injunction based on Prime’s allegation that MAI is violating Federal Reserve margin requirements, which limit the amount of stock that can be pledged as collateral in a takeover. Prime said it is considering appealing the ruling on the margin issue.

For its part, Prime issued a statement saying it is “very gratified that Judge Mazzone has ordered MAI and Drexel to make the disclosures we have been seeking for 5 months.”

A Prime spokesman said MAI has previously disclosed financial information about Drexel for the period ended Sept. 30, 1988. The spokesman said that information did not include the financial impact of Drexel’s recent agreement to plead guilty to criminal charges of security fraud and defrauding customers and to pay $650 million in penalties.

Prime, which has resisted MAI’s bid, said last week that it is seeking other buyers for the company. The decision marked a turnabout for Prime’s board of directors, which had previously sought to keep the company independent.