Under the revised terms of Alleco Inc.'s planned sale of its Service America subsidiary, which was reported in the Business section Wednesday, the buyer, Servam Corp., will pay $345 million in cash and assume $105 million of Alleco's outstanding debt. Under the earlier terms of the deal, Servam was to pay $450 million in cash for the subsidiary. (Published 11/14/87)
Alleco Inc., the Cheverly company that was formerly Allegheny Beverage Corp., said yesterday it has renegotiated the sale of Service America Corp., dropping the price for its only remaining subsidiary from $450 million to $345 million.
Servam Corp., which is buying the food-service business, will assume $105 million of the company's outstanding debt as part of the change. That "makes the deal more likely," according to Richard Jones, who tracks the company for the Washington brokerage firm Johnston, Lemon & Co.
Alleco recently said the sale was in jeopardy because turbulence in the financial markets made it difficult for Servam to negotiate the loans it needed.
"I think it's very positive," said Jones. "It will make it a lot easier to come up with the loan."
Company officials said they could not place a dollar-per-share value on the renegotiated price. Alleco stock closed at $5 in over-the-counter trading yesterday, down 75 cents.
The company also said that it could not recommend the after-sale payment to stockholders of a special dividend of $1 a share that previously had been proposed.
Alleco, formerly a diversified services company, has sold all its divisions except Service America after stumbling under debts of more than $200 million. The company needs to sell the subsidiary to pay off its remaining loans.
The first of those loans, a $15 million revolving credit line, was originally due Oct. 31. The company's banks have extended the due date until Dec. 31, officials said yesterday