Smith Corona Corp. Sold To Carolina Wholesale.

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Author: Malester, Jeff

CORTLAND, N.Y. -- Onetime typewriter king Smith Corona Corp. last week 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 and began 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, earlier this year Smith Corona said it would consider all strategic options, and it 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 by dropping manufacturing for marketing and sales.

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By Jeff Malester