Atari, the computer and video-game manufacturer acquired by businessman Jack Tramiel two years ago, said Thursday that it hopes to sell up to 5 million shares--18% of its common stock--to the public for about $70 million.
If the offering proceeds, Atari will pay its former owner, Warner Communications, $36 million in cash and 25% of the company's stock, according to the registration statement filed at the Securities and Exchange Commission.
After the offering, Jack Tramiel will own 45% of the company. With the holdings of other family members, he will control slightly more than 50% of Atari's stock.
Atari has changed hands twice in its colorful 14-year history, but the public has never had the opportunity to invest directly.
Atari's founders, including inventor Nolan Bushnell, sold the company for $28 million to Warner in 1976. Over the next eight years, Atari generated about $650 million in total profits for Warner before a product glut triggered losses that mounted to nearly $875 million during an 18-month period in 1983-84.
Warner collected no cash from Tramiel when it sold Atari in July, 1984, but Tramiel promised to pay $240 million in long-term notes. By year-end, however, Tramiel went to Warner for an $18-million cash infusion, and Warner eventually wrote down the value of the Tramiel notes to zero.
Warner Vice President Geoffrey W. Holmes said Thursday that "most or all" of the $18-million payment was later recovered by Warner.
"I think it's wonderful. An asset that was written down to zero has now re-emerged," said Gordon Crawford, senior vice president of Capital Guardian Research Co., a unit of Los Angeles-based Capital Group, which owns 7% of Warner.
In its SEC filing, Atari said it earned $12.4 million for the six months ended June 30, 1986, compared to a net loss of $26.7 million during a similar period a year earlier. Atari posted net sales of $105.6 million for the first six months of 1986, compared to $47.6 million in 1985.