Black & Decker Corp., the world's largest producer and marketer of power tools, yesterday announced agreements to sell four businesses as part of its ongoing effort to reduce debt stemming from its 1989 takeover of Emhart Corp.
Together, the four sales will generate a net income of $150 million, Black & Decker officials said.
Among the businesses being sold is Medic Inc., a medical computer systems subsidiary of Planning Research Corp., a Northern Virginia-based defense contractor formerly owned by Emhart. Medic will be sold to a management-led buyout group.
Other companies to be sold include True Temper Hardware, which will be bought by Huffy Corp. of Dayton, Ohio; GardenAmerica, sold to James Hardi Industries Ltd., an Australian company; and a Black & Decker electrical components firm, which will be bought by Yosemite Investment Inc., a California investment group.
Combined with $550 million gained from earlier sales of three Emhart properties, the newest agreements mean that Black & Decker would have raised $700 million, enough to cover a $685 million payment due on the Emhart debt by Dec. 31.
Still, there is worry. The Towson, Md., company borrowed $2.8 billion to buy Emhart, with its chairman, Nolan D. Archibald, publicly pledging to retire the first $1 billion of that debt by the end of 1989. Key to that plan was the disposal of all of Planning Research Corp. and its sister firm, Advance Technology Inc., also located in Northern Virginia.
But the defense market turned sour, thanks to end of the Cold War and other events that led to the fall of communist regimes in Europe. Values for PRC and ATI fell dramatically, forcing Black & Decker to take them off the market.
"If we had known then what we know now, we wouldn't have said that we were going to pay $1 billion back by the end of 1989," said Barbara Lucas, spokeswoman for Black & Decker. Lucas said that Black & Decker is concerned about Wall Street's apparently dim view of its stock's value.
"Wall Street is concerned about any company that's highly leveraged," she said. "But people who know us know that we can handle this and that we'll make our payments on time."
In the past year, investors have pushed Black & Decker's stock down by two-thirds, from the $23 range a year ago to $8.87 1/2 by yesterday's close.
"Wall Street is worried about Black & Decker's debt. But we believe that debt is manageable," said Clifford F. Ransom II, managing director of the Institutional Research Department of Ferris, Baker Watts in Baltimore.
"The key to this whole process is that they've been getting excellent prices on what they've sold," Ransom said of Black & Decker's effort to sell off businesses.