Completion of Prime Buyout Expected Soon
J. H. Whitney & Co. officials announced Tuesday that they expected to complete within 10 days a $1-billion-plus takeover of Prime Computer Inc., which has been battling Tustin, Calif.-based MAI Basic Four’s hostile buyout offer and losing money for nearly a year.
Whitney partner Russell E. Planitzer said James F. McDonald would be named Prime’s new president after the tender offer for 79% of Prime’s shares is completed at the annual board meeting Thursday. A new board will be installed when the deal is complete, he said.
Prime, a Natick, Mass.-based minicomputer maker, had been searching for an ally against a $1.13-billion hostile bid from MAI Basic Four when Whitney, the nation’s oldest venture capital firm, came forward in June.
The companies agreed to a friendly merger under which Prime will effectively become a private company.
Repaying Debt Pivotal
McDonald, the next president, has most recently been president of Gould Inc., which he guided to a turnaround and subsequent sale to Nippon Mining Co. in 1988. He succeeds Anthony L. Craig, who has held the post since November and has chosen to resign after the Whitney group completes its tender offer.
Although Prime’s stock will no longer be publicly traded, it has issued debt to the general public and thus will be required to release certain financial information publicly.
Repaying debt will be pivotal for Prime in the coming months, said John W. Adams, who follows Prime for the Boston investment firm of Adams Harkness & Hill.
“The real issue is whether all that debt on the balance sheet is going to make a difference to customers,” he said. “Prime had a very strong balance sheet going into this and goes out with a very leveraged balance sheet.”
McDonald said the company’s two immediate priorities would be employees and customers. He said both groups had been severely shaken by the long struggle against MAI Basic.
“If I were a customer in the last 10 months, (the company’s situation) would have bothered me to death,” he said. “I think the change is a very welcome one.”
McDonald said the computer company would remain in Natick, but that a new business strategy would include an undetermined number of layoffs and “substantial changes” in the company’s senior management.
