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July 7, 1993

WANG FILES AMENDED REORGANISATION PLAN, HOPES TO EXIT BANKRUPTCY THIS AUTUMN

By CBR Staff Writer

Wang Laboratories Inc and its creditors’ committee filed an amended plan of re-organisation to the US bankruptcy court in Boston yesterday. The Lowell, Massachusetts-based company is being very gung-ho about the latest plan, with a spokesman claiming that it fully expects to emerge from Chapter 11 by the end of the year: the original filing, made on March 16 has been amended; but the spokesman says that this was expected and that no further amendments are envisaged. The new proposals keep the projected company size at 6,000 employees, but projected revenues and losses have changed. Under a complete re-working of the figures under the Chapter 11 fresh start accounting rules, the amended plan projects revenues of $955m, operating profits of $76mn and net profits of $26m for a 12-month period beginning October 1 (it’s old financial year closed on June 30, and it reckons sales were around $1,300m). The company also plans to take a $23m amortisation charge required by fresh start accounting for the period. This assumes that Wang emerges from protection by September 20. It will be a tight squeak to make this deadline though; the court will hold the initial hearing on August 5 to decide whether the disclosure statement explains the plan adequately. If it does then the creditors and stockholders have to agree the plan by ballot and the court has to hold a final hearing to confirm the plan. On July 2 Wang asked the court for permission to borrow up to $50m from Congress Financial Corp. If granted, this will be used for restucturing, and paying off pre-petition secured debit from other lenders. Wang says it expects operations after Chapter 11 to be financed through a further line of credit worth up to $60m. In addition potential investors will be circulated with private placing memorandum for $40m in 12% exchangeable preferred stock and warrants to buy 2.4m shares of new common stock. The plan also provides for 12.5% of Wang’s common stock to be owned by employees under a new incentive programme. Existing holders of class B and C shares will get seven year-nine month warrants to buy around 20% of common stock in the re-organised Wang. However the value per share of the existing stock is not expected to be more than a few cents at the time the warrants are initially issued, Wang is warning.

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