Commercial Credit Co., the Baltimore-based financial services unit of Control Data Corp., is seeking to divest itself of more than one-third of its $5.7 billion in assets by next spring, according to a filing with the Securities and Exchange Commission.
Control Data, which is suffering from the general downturn in the computer industry, also disclosed that it was in technical default on some of its bank loans after restating its 1984 financial results last week because of SEC objections to its accounting practices.
Control Data also said that it expects to record an operating loss for its computer business in 1985.
Commercial Credit plans to sell $2 billion of its assets over the next five to eight months, including its commercial lending business and part of its international loan portfolio, Control Data said.
After divesting those assets, Commercial Credit "intends to expand and improve its remaining profitable core businesses of consumer financial services, vehicle leasing and life and business credit insurance," according to the filing.
These plans are part of a general restructuring of the finance company that includes "reducing its reliance on thrift deposits as a funding source due in part to cost considerations and in part to the reluctance of depositors to make deposits in institutions which are not federally insured," the filing said.
Minneapolis-based Control Data had tried to sell Commercial Credit for months before giving up in June because it was unable to get the price it wanted. Control Data had asked $1 billion for the subsidiary last November, but had cut the price to $844 million by May 1. The subsidiary already has reduced its staff from 9,000 to about 6,500.
Commercial Credit had assets of $7.4 billion at the end of 1984 and earnings for the year of $50 million on revenue of $1.3 billion.
Control Data earned $5.1 million on revenue of $5 billion in 1984. The company had reported a profit of $31.6 million, but reduced it last week at the SEC's request.
The company lost $14 million on revenue of $2.5 billion in the first six months of this year. Before the revision, it had reported a loss of $5.4 million for the same period.
The SEC challenged the earlier financial results after disagreeing with Control Data's use of some tax deductions and accounting methods.
Restating the figures brought the company into technical default on revolving-credit agreements that include provisions for maximum debt-to-equity ratios, minimum net worth and restrictions on stock dividends, according to the SEC filing.
Control Data said it later received waivers on the defaults from its lenders, and expects the waivers to be extended until it can repay $209 million due with proceeds from two planned public offerings.
The bank waivers will allow the company to pay a third-quarter dividend of 18 cents a share on 38.5 million shares of common stock, worth about $6.9 million.
The disclosures were included in a preliminary prospectus filed Friday with the SEC as part of registration materials for Control Data's planned offerings of notes and preferred stock, with which it hopes to raise $300 million.
The company hopes to sell $200 million in subordinated 10-year notes and $100 million of depositary convertible preferred shares.