Osborne's Happy Christmas
The Age
Monday July 31, 1995
Gateway 2000 of America has agreed to rescue Osborne and its customers. THE 530 Osborne Computer customers who prepaid by cash or cheque for a personal computer will receive their PCs after all, thanks to the intervention of Gateway 2000, America's fifth largest PC company.
An Osborne creditors' meeting in Sydney on Friday agreed in principle to the sale of the company to Gateway 2000 and Micronics Corporation. Details are expected to be finalised this week. As a result, Gateway's vice-president international, Bob Spears, promised customers that outstanding orders would be delivered by Christmas.
Unsecured creditors, however, can expect a return of only 5 to 10 cents in the dollar. Customers who paid for their computers via credit cards have already been advised to contact their banks for a refund.
Spears said the new company would continue to use the Osborne name for at least six months, during which time it would honor all outstanding orders that had been paid for.
The deal gives Gateway an 80 per cent stake in Osborne.
More importantly, it gives the US company a quick entry into the fast-growing Australian PC market. Gateway is understood to have kept out of the Australian market because it believed Osborne was a similar operation.
It is believed that Gateway will lobby the Commonwealth Government to restore Osborne's status as a federal supplier. Negotiations will probably turn on using Australia as a manufacturing base for South-East Asia, and a possible Australian-based 24-hour support centre, to serve the whole Asia-Pacific. Gateway has a similar centre in Dublin to cover Europe.
John Star, Osborne's administrator, compiled a rescue plan for the company that would have seen every outstanding customer receive either a 60 per cent refund of money paid or their PC within two years.
He estimated Osborne would need at least $12 million in working capital over the next year to do that. Even more money would be needed to meet Gateway's earlier delivery schedule.
Jim Wharton, Gateway's director of investor relations, said no significant changes in the employee base at Osborne are contemplated. Australian law has specific requirements regarding employees at a company that seeks voluntary administration, and Wharton said Gateway will comply with those requirements.
He said changes in top management had not yet been resolved.
It is believed that former Osborne director John Linton will be sued to recover a $1.5 million loan made to him by the company.
Two companies associated with Osborne director Stanley Falinski are among the list of secured creditors, but under Star's arrangements they would not receive any money from the sale of Osborne. The two companies reportedly sought to appoint their own receiver to Osborne last week, a tactic that could have blocked any sale negotiations by Star.
© 1995 The Age
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