Despite widespread expectations that negotiations had reached a successful conclusion, Wang Laboratories Inc announced at noon New York time yesterday that it had still not reached agreement with its bank lenders for restructuring of its short-term debt. The company has received a further stay of execution from the pressing bankers – who are in too deep to gain anything by forcing the Wang into Chapter 11 bankruptcy – and they agreed to allow the Lowell, Massachusetts office systems manufacturer to suspend payments of principal and interest on its institutional debt. The company is in big difficulties because it made it a practice to finance its business on a day-to-day business on large lines of short-term borrowings that were tied primarily to the company maintaining a minimum net worth. With the enormous write-offs that Wang took with its year-end figures it no longer meets that minimum net worth agreement and is therefore in technical default on the loans, and they will have to be replaced with something that gives the jittery banks more certainty that they will eventually get their money back.
