Computervision Corp, in a week of wheeling and dealing, has sold one company, bought another and settled an acrimonious class action from 1991. The Bedford, Massachusetts company is now almost shot of its Prime Computer-based Open Services Solutions business at last, but it’s on far less favorable terms than hoped, and the deal reeks of hard bargaining. As reported earlier this year (CI No 3,126), the plan was to sell Open Service Solutions Co to CVSI Inc for around $100m. The putative buyer was JF Lehman & Co, and when that deal fell apart, New York-based MD Sass Investors Services Inc stepped into the breach – but it’s no white knight: Computervision gets only $30.2m in cash, of which $7.6m was paid by Sass for 76% of CVSI’s stock. The remaining $25m was paid direct from CVSI, along with a $10m loan. The upshot is that Computervison retains an unwanted 24% of CVSI Class A stock, but if the $10m note is repayed within the first year, the remaining Class B non-voting stock will be acquired for $15m. If CVSI doesn’t achieve satisfactory revenue and profit levels, it can buy the remaining stock at a nominal price. Computervison says it expects a $45m hit against 1997 second quarter revenues from this transaction and ongoing rationalisation. Second quarter follows
Computervision’s next move was the acquisition of Knowledge Integration Center from Dayton, Ohio-based USE Inc. Operating as Concentus Technology Corp, the company’s KI Shell workflow automation software is already integrated into Computervision’s Electronic Product Definition suite – its core business and future technology strategy, says Computervision. Neither company dislcosed the terms of the agreement. To round off a busy week, Computervison finally gave way on a class action started by disgruntled shareholders back in 1991. The plaintiffs alleged that minority stakeholders failed to receive adequate consideration in the merger shenanigans that ensued after Prime collapsed into the arms of J H Whitney’s DR Holdings in 1989, a year after acquiring Computervision. Interestingly, the negotiations to sell the Open Service Solutions division began in September last year, when Computervision tried to relieve its onerous debt legacy by negotiating with investment group J F Lehman & Co. In 1990, Shearson Lehman agreed to take a lower interest on its $500m loan to Prime’s parent, DR Holdings (CI No 1,493).