Wang, Creditors Come to Terms : Computer Maker to Sell Assets, Resume Loan Payments
Struggling minicomputer maker Wang Laboratories Inc. said Monday that it has worked out an accord with its banks on a new debt package and will immediately make some payments.
“Dr. An Wang, chairman and CEO of Wang Laboratories Inc., announced that the company had reached agreement with its bank lenders and intends to make all required payments on its debt obligations today,” Edward Grayson, senior vice president and general counsel, said.
Lowell, Mass.-based Wang, which has been hit by slumping sales, owes about $962 million. Last week it suspended certain principal and interest payments after rejecting a proposal from its creditor banks, led by the Bank of Boston.
The new agreement with the banks requires Wang to pay its debts in the order that they come due, using proceeds from asset sales. It would allow Wang to use the remaining proceeds to borrow more cash.
Fresh Loans
The company is looking for a buyer for its InteCom unit, which produces private branch (PBX) telephone systems and which posted about $90 million in sales last year. It said it was exploring the sale of other businesses, including its Wang Credit Corp. leasing operations.
Wang said amendments to existing agreements should provide it with $100 million in fresh loans, and it has pledged its assets, excluding inventory, to the banks.
Analysts say the once-prosperous firm ran into serious problems after it failed to update its products and make them compatible with units made by International Business Machines Corp. and other manufacturers.
Industry observers have speculated that Wang may seek a partner to buy some assets or take it over. The company is shielded from a hostile bid, however, because control of the voting stock is held by the Wang family.
Last week Wang announced the resignation of Frederick Wang, son of founder An Wang and president of the company. The younger Wang had a reputation as an ineffective executive. Industry analysts said his resignation signaled that An Wang, who is recovering from cancer surgery, was intent on assuring the company’s survival.
Search Team
In announcing the resignation, the company said it was exploring a variety of options and had retained Salomon Bros. and Lodestar Group as financial advisers.
Wang said Monday that a three-person selection team was close to finding a new president. In the meantime, Vice Chairman Harry Chou is serving as acting president and chief operating officer.
Industry analysts said the company’s agreement with its banks and the search for a new president are prerequisites for Wang to proceed with its reorganization.
“These two issues are hiding the real issues,” said Smith Barney analyst Shao Wang. “Clearly, you need the financing and an operating guy in charge, but you still have to face the real issues of how this company is going to turn around.”
Wang’s financial fortunes have deteriorated since 1984, when it reported record annual profits of $210.2 million. In the next year, the company barely broke even, and last week it reported a net loss of $424.3 million for fiscal 1989.
