Computer Associates seeks loan to buy software firm.

Computer Associates Seeks Loan to Buy Software Firm

Computer Associates International Inc. is seeking to line up new bank financing to help fund its planned purchase of Pansophic Systems Inc. for approximately $282 million in cash, or $16.15 a share.

Preliminary talks have been held with Barclays Bank PLC, which leads Computer Associates' existing bank group.

Talks have also been held with several other outside banks, according to a Computer Associates official. He wouldn't identify the outside banks.

The company is seeking around $100 million in new bank loans, "plus or minus $25 million," said Peter Schwartz, chief financial officer.

Quest for Funding Sources

At the same time, the Garden City, N.Y., software firm is looking at other potential funding sources, including the private placement market, according to Mr. Schwartz.

A decision on the funding sources is expected by the end of this week.

As of June 30, Computer Associates had about $260 million in cash and marketable securities on its books, as well as access to an untapped credit line from the Barclays-led bank group, totaling $150 million.

While those funds would more than cover the cost of the Pansophic acquisition, Computer Associates is also in the process of buying another software firm. Late last month, the company launched a tender offer for On-Line Software International Inc. for a total of about $120 million. The tender offer is set to expire Sept. 20.

Group Members Polled

Mr. Schwartz at Computer Associates said Barclays is getting in touch with other members of the existing bank group about their interest in a new credit. Members of the Barclay's group include Chemical Bank, IBJ Schroder, Bank of Nova Scotia, Mellon Bank, Shawmut Bank, Bayerische Vereinsbank AG, and Banque Veuve Morin-Pons.

The Barclays-led group provided Computer Associates with two separate revolving credit lines late last year totaling $150 million. As of June, Computer Associates had not drawn on either line. Earmarked for working capital, the revolvers mature on April 30, 1993.

Following Tuesday's acquisition announcement, Pansophic shares were trading late in the day at $15.125, up $3.625. Computer Associates' stock was trading at $8.25, down 12.5 cents.

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