TU International Inc., in an effort to expand its operations in the computer software market, has launched a joint venture with a Fairfax software company and a small Oklahoma City energy company.
The Falls Church company announced last month that its computer-equipment subsidiary, Terminals Unlimited, had joined Business Management Systems to create Software Systems Inc. to develop software products for the popular IBM personal computer.
Now, TU chairman David M. Owens announced yesterday, SSI will become a subsidiary of Seville Energy Corp., a small oil and gas exploration company that has eagerly been searching for an entry into the computer market for the past year, ever since oil and gas stocks tumbled in the stock market.
Under the agreement, BMS will continue to develop the software products and TU will also continue to market them. Seville, with a little more than $1 million in ready cash, will provide the funds for SSI.
To become part of this venture, Seville will pay a "nominal amount of cash" and 2.5 million Seville shares each to BMS and TU, Owens said. With Seville shares trading for 25 cents yesterday, the deal is worth a little more than $1.25 million.
Last winter, Seville had reached a tentative agreement to buy all of TU's time-sharing subsidiary, Rocky Smith Enterprises, which had become part of TU last year when the company was merged with Duke of Energy Corp.
The deal fell through at the last minute, after TU got a better bid from another company.
However, knowing that Seville wanted to diversify and that it had cash available, TU kept the company in mind for a time when it needed additional funds for its joint venture.
"Until we have a possible public offering later this year or early next, this deal with Seville allows us to go into software without depleting our capital" that is targeted for other areas, Owens said.
Seville was organized in 1980 to explore for oil and gas. However, its plans to be strictly an energy company fell through in April 1982, when investors began shying away from the oil and gas industry, according to Seville's chief, Brad Yarbrough. Unable to attract investors at that time, Yarbrough said the company decided to cut back its six-member staff to two and sit on its assets of about $1.1 million while looking for the right diversification opportunity.
SSI's first two products will be for the IBM personal computer. One is designed to make the IBM personal computer easier to operate for first-time users, while the other would reduce the cost of service on the machine and its companion products by allowing the user to locate functional problems in the computer or its component systems, Owens said.
"There is a potential there somewhere in the area of $9.5 million of sales a year," Owens predicted.