Oak Industries Obtains $15-Million Credit Line

Oak Industries Inc. said Thursday that it has obtained a $15-million secured line of credit from Foothill Capital Corp., clearing the way for a restructuring of $230 million in debt.

The troubled cable-TV and media company said that 72.7% of its outstanding debentures have been tendered in an exchange offer that expires March 13.

Under an agreement with the California Department of Corporations, Oak needed to have at least 70% of the debentures exchanged and to secure at least $10 million in a line of credit to complete the restructuring and allow the company to pay its bills in the coming months.

Oak earlier said that, without the restructuring, it would be unable to make cash interest payments on the $230 million in debt and would consider filing for bankruptcy.

Under terms of the exchange offering, which affects three separate debenture issues, debenture holders will receive a combination of stock, warrants and notes. The restructuring is based on a plan to pay interest on the notes in common stock rather than in cash.

Oak said it intends to pay stock for the “foreseeable future,” saving about $20 million of its $28 million in annual cash interest payments. Oak said it will use the saved cash for working capital and for financing its “recovery programs.”

Terms of the two-year line of credit were not revealed, although company officials said it is secured by “certain receivables.”

Oak earlier revealed that it was having “difficulty obtaining credit on favorable terms, either on a secured or unsecured basis.”

The company has a negative net worth of about $23 million and has reported losses in each of the last nine quarters, including $80 million in write-downs in the fourth quarter of 1984.