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CA invests $US50m in ailing distributor CHS

CA invests $US50m in ailing distributor CHS

Computer Associates International has agreed to invest up to $US50 million in financially troubled CHS Electronics.

CHS will use the proceeds for working capital purposes, the companies said in a statement. In turn, the Miami-based distributor will allow Computer Associates to market, distribute and resell some of its products.

The cash infusion appears to come at just the right time for CHS, which has experienced some financial woes of late. The company was forced to sharply revise its 1998 earnings in March after auditors determined the company had overstated the amount of vendor rebates it paid out in the fiscal year. At the time, CHS said it would reduce its workforce by 10 per cent, consolidate operations and possibly close warehouses and other operations. It also said it would seek to reduce operating expenses by $US40 million and increase cash flow by $US50 million in 1999.

CHS operates in 46 countries and, according to its own estimate, is the largest distributor in Europe and Latin America.

Last month, CHS and Computer Associates also agreed to bundle Computer Associate's IT management software with server, desktop and storage products distributed by CHS in Europe, the Middle East, Asia and Latin America.

Computer Associates http://www.cai.com

CHS Electronics http://www.chse.com


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