Encore Computer Faces Liquidation After Real-Time Sell Off

Computergram International, March 23, 1998

It looks like the end for Encore Computer Corp at last. On Friday, Encore signed a letter of intent with Gores Technology Group to sell off its last remaining business - real-time systems - for a meager $5.5m. If the sale is completed, the intention is for Encore to be liquidated. The deal, subject to the completion of due diligence by Gores and further negotiation over asset purchases, will also be subject to shareholder approval.

Encore shareholders aren't at their happiest right now, and after the company's decision to sell off its storage business to Sun Microsystems Inc for $185m last year, a group of rebels threatened legal action when 80% of the proceeds of the sale went straight to majority shareholder Japan Energy Corp (CI No 3,298). JEC's Gould Electronics Inc division still owns 48.44% of Encore, as a result of Encore's disastrous attempted acquisition of Gould's computer business in 1989 for $140m in exchange for debts that were never cleared. Other shareholders ended up with virtually nothing fro m the sale. This time Gould has waived its rights to receive any portion of the first $30m of liquidating distributions to the Encore stock holders in any liquidation that occurs before November 1999. Without its storage business, and after a decision earlier this year to cease the development of its NT cluster product line, the Infinity real-time system boards and software products were all that was left. Los Angeles-based Gores is a twenty-year-old high technology business management organization that has acquired such companies as project management firm Artemis Management Systems (CI No 3,111), document management company Information Dimensions Inc (CI No 3,209), manufacturing software house Computer Design Inc, and product data management firm Applicon Holdings Inc over the last few years. Affiliate Gores companies represent consolidated revenues of nearly $100m, and an annual growth over 35%. Encore's years of debt - see finance section.