When Power Computing shareholders meet in Texas later this month, they will be asked to vote for the dissolution of the former Mac clone maker.
Investors are expected to vote in favor of such a move, which would bring closure to a company that burst onto the Mac scene with flair and rapid growth, only to encounter troubled financial times as its plans to go public went out the window and Apple, its Macintosh licensee, stepped away from its commitment to issue clone maker licenses.
In a Securities and Exchange Commission filing today, Power said it will hold a special shareholders meeting on January 26 seeking shareholder approval of the dissolution and liquidation of the company.
The filing provides a revealing glimpse of Power's financial health, and also sheds light on the events leading up to the sale of its Mac assets to Apple in a $100 million stock deal announced last year.
The clone maker, which was formed in 1993 and began shipping in 1995, was the first company to receive a license to sell Macs. The company took the industry by storm with lower prices--achieved through direct-distribution--and was noted for advertising with attitude. It had been on a sharp growth trajectory, and had enjoyed several profitable quarters before things took a downward turn.
Power, looking to raise working capital, filed for an initial public offering in June of last year. But when the clone maker suffered and unexpected $3.9 million loss for the June quarter, and proved unable to resolve its licensing woes with Apple, the company's investment bankers advised Power to withdraw its IPO bid.
The clone maker sought alternative debt and equity financing and landed a $10 million bank loan. Stephen Kahng, Power's chairman and chief executive, met with a number of potential equity investors in the United States and Asia about taking a stake in the company, but walked away empty handed.
That led the board to suggest seeking a buyer for the company.
Talks with Apple began in late June of last year, in the midst of license renegotiations. Power wanted to know if Apple would be interested in exploring an acquisition, and Steve Jobs, who was then an adviser to the company, later held a conference call with Kahng.
The following month, Kahng and his executives met with Jobs and Apple executives at Apple's Cupertino headquarters to discuss licensing issues and any proposals that concerned Power. At a July 25, 1997, meeting, Apple offered up a $75 million deal--a third in cash and two-thirds in stock--to buy certain Power assets.
Power countered by proposing that Apple instead buy the entire company, but Apple was interested only in buying its assets. Power said $75 million simply wouldn't cut it.
Two days later, Jobs met with Kahng and indicated that Apple might be willing to pay more. On the following day, Khang and his executives met with Apple CFO Fred Anderson and asked for $125 million in addition to the assumption of $25 million in debts.
Jobs later countered with an $80 million proposal and an offer to assume some of Power's technical support obligations. Shortly afterward, Jobs and Kahng discussed a proposal that would net $100 million for Power's assets in an all-stock deal.
Power's board of directors met on August 14, 1997, and Kahng gave attendees an update on discussions with Jobs. After taking into account Power's current and projected financial condition, the board gave the go-ahead for pursuing further talks with Apple.
Negotiations took place between August 21, 1997, and August 29, 1997, and ended with Apple and Power reaching an agreement. On September 2, 1997, Apple purchased the core operations of Power Computing, the largest Mac clone maker, in a stock deal worth $100 million.