Cash-Short Control Data To Sell Imprimis Subsidiary
BLOOMINGTON, Minn. (AP) _ Control Data Corp. says it intends to sell a subsidiary that accounted for a third of its revenue last year in another step by the troubled computer maker to raise cash.
Control Data said Monday it will sell its computer data storage subsidiary to California-based Seagate Technology for $300 million in cash and notes and $150 million worth of Seagate stock.
The data storage unit, Imprimis Technology, was established as a separate Control Data subsidiary last year and accounted for a third of the company’s $3.6 billion in revenue, said spokeswoman Nancy Foltz.
Proceeds from the proposed sale, which must be approved by the boards of directors at both companies and undergo government review, will be used for repayment of debt and to provide additional working capital, Chairman Robert Price said.
The companies expect to reach a definitive agreement over the next several months.
In mid-April, Control Data shut down its ETA Systems supercomputer subsidiary and announced the layoff of 3,100 employees in a move that it said would cost $350 million and raise the company’s second-quarter write-down to $490 million.
At the same time, Control Data - once one of the world’s largest computer makers - said it would sell parts of the company to obtain loans beyond those available under its current banking agreement.
Seagate, a maker of data storage devices based in Scotts Valley, Calif., would finance the purchase by giving Control Data $250 million in cash and a $50 million promissory note. Control Data also would get a seat on Seagate’s board of directors, the company said.