CORTLAND, N.Y. -- One-time typewriter king Smith Corona Corp. today filed Chapter 11 for the second time in five years, signing an asset purchase agreement with Charlotte, N.C.-based Carolina Wholesale Office Machine, a distributor of office equipment and supplies.
Under the agreement Carolina would pay about $6 million for Smith Corona's inventory, accounts receivable, intellectual property, equipment, dies and molds and certain contracts and licenses. Carolina said it would continue the Smith Corona name, products and service after organizing Smith Corona as a separate operating entity, with a strong focus on the core typewriter and supplies products.
The deal, subject to court approval and an overbid process, is scheduled to close in mid to late July. In the meantime, Smith Corona, which said it had annual revenues of $30 million, will continue to receive and fill customer orders.
Smith Corona currently offers seven models of electronic typewriters and supporting supplies and accessories as well as office products that range from wireless phones and fax machines to headsets and inkjet replacement cartridges. The company has not manufactured any products since November 1997 when it became a sales and marketing organization, obtaining its products from third-party sources.
Smith Corona also reached an agreement with its lender, Congress Financial Corp., to amend its existing credit agreement as debtor-in-possession financing. It is expected that this enhanced borrowing plan -- which needs court approval -- combined with cash from operations, will support the company's needs through the proposed sale transaction.
In light of a downturn in performance in 2000, Smith Corona earlier this year had said it would consider all strategic options and since has decided the asset purchase sale to Carolina Wholesale provides the greatest opportunity to satisfy creditor claims.
Smith Corona first filed for Chapter 11 protection in July 1995, emerging under a new capital structure in February 1997. In the past three years, the company has continually streamlined its organization -- mainly dropping manufacturing for marketing and sales.
"Despite tremendous efforts over the past five years, it became clear that Smith Corona could no longer continue to operate as a stand-alone business," said Martin D. Wilson, newly appointed president/CEO. "The new product sales that would have alleviated our financial constraints did not materialize. Typewriter supplies and accessories sales continue, but at reduced market share. The voluntary filing under Chapter 11 offers the best opportunity to complete an asset sale and maximize creditor recovery."