With the need to finance its superfast growth, Sun Microsystems Inc is going through cash like a Paddy on St Patrick’s Day, and it has had to go back to its sugar mummy, AT&T Co, for another handout, this time a cool $79m, which it says it needs for working capital and to expand its […]
With the need to finance its superfast growth, Sun Microsystems Inc is going through cash like a Paddy on St Patrick’s Day, and it has had to go back to its sugar mummy, AT&T Co, for another handout, this time a cool $79m, which it says it needs for working capital and to expand its capital base (which latter enables it to borrow more easily if it has the need). The agreement with AT&T is a superb one, both for the company and its other shareholders, since it allows Sun to demand that AT&T buy new shares – up to a limit of 15% of the expanded equity – at a 25% premium to the closing market price for the previous 20 trading days. This time it is issuing 3.2m shares at $24.632875 a time to raise another $79.1m for the Mountain View, California workstation builder. By its calculations, it reckons that AT&T will then have about 13% of its equity; the agreement limits AT&T to 20%, including shares it buys from time to time in the market, by January 1991. Sun will now have to get by with what its got for a bit, because it is not permitted to return for another sub for 90 days.
