Following the initial signing of an agreement in June (CI No 693), an investment group led by privately-owned New York-based financial services concern E M Warburg, Pincus & Co has restructured its bid for ComputerLand Corp, Oakland, California, reportedly denying any management control to the retailer’s founder or his family. Under the new proposal, ComputerLand founder William H Millard will not, according to sources involved in the deal, hold a spot on the board or in management, although he might end up with as much as a 38.5% stake in the firm; under the original bid, Millard would have retained only a 20% holding of his 96% stake. The bid for ComputerLand, the world’s largest retailer of personal computers, was apparently modified due to fears that Millard’s continued relationship with the company would impact negatively on its future. Under the original plan, Millard would have been able to reclaim on or more seats on the board in 1991, provided he won favourable settlements in two lawsuits involving disputed ComputerLand shares. Under the new bid, Millard will reportedly only be able to appoint a representative to one seat of what will probably be a nine-member board. As part of the new agreement, the Warburg Pincus group will purchase approximately 52% of ComputerLand directly from Millard and about 4% from minority shareholders. Of Millard’s remaining 44% stake, 28.5% will be held in trust, awaiting the outcome of the appeal of the Micro/Vest decision. In 1985, Micro/Vest, a Hayward, California-based investor group formed to acquire and pursue rights in a festering dispute between Millard and one of his original backers over ComputerLand, won a jury decision against ComputerLand over its failure to live up to the terms of a $250,000 loan. In exchange for allowing the first Warburg Pincus sale to go through, Millard upped the Micro/Vest award (payment of which is contingent upon the outcome on the appeal) to a 28.5% shareholding. Another 15.5% stake is also being held in trust, awaiting the outcome of a separate case. Under the latest plan, Micro/Vest receives a 5.5% stake of its possible 28.5% holding free and clear – regardless of the outcome of the appeal.
