Control Data has now reached agreement with its lenders, a group of nine banks led by Bank of America, on an amended credit agreement. The new agreement, which runs for 12 months, provides for up to $115m in standby letters of credit and direct credit of up of $90m at peak availability. Control Data will use the direct credit primarily to bridge the time between near-term cash needs arising from the restructurings announced in April 1989 and the completion of asset sales already announced. Credit availability will be reduced by an amount equal to 80% of net cash proceeds from asset sales. The company expects cash flow from on-going operations to be positive in 1990. The standby letter of credit is secured by the shares of CDC’s Arbitron and Imprimis subsidiaries; the shares of Imprimis, on its way to Seagate Technology, will be released when that transaction is completed. The direct credit part of the facility is secured on the CDC’s US trade accounts receivable. There are modified net worth and operating profit covenants under the new agreement, and the banks would have the option to call in their cash if these were to be breached.
