Eagle Computer Gets Refinancing Plan
Eagle Computer, struggling to survive the ongoing shakeout among personal computer makers, said Tuesday that it has reached a tentative agreement to refinance all of its remaining $7.5 million in debt.
The deal, subject to final approval from the company’s creditors and the state corporations commissioner, would give Garden Grove-based Eagle its first breathing room since last year, when the once-soaring company fell dangerously close to bankruptcy.
“This is the final and most significant step in the process of re-establishing Eagle as a financially sound contender in the personal computer marketplace,” said President Gary Kappenman, who took over the helm of Eagle last October. “It’s no fun to operate a company with creditors who can demand repayment at any time.”
Under terms of the tentative agreement, Eagle will repay Bank of America, its largest creditor, about $1.6 million of the $5.5 million that the bank has been owed since March, 1984. The rest of the loan would be repaid over five years.
Other Repayments
Furthermore, the company would repay its trade creditors about $400,000 of the approximately $2 million they are owed. The rest of that debt would be converted to stock or long-term notes.
Kappenman said he expects the money transfer with Bank of America to be completed within two weeks. However, he said details involving the repayment of each trade creditor could take as long as several months to wrap up.
Cash to repay the debts would come from Eagle’s planned sale of its inventory to Aceco Electronics Co., the South Korean manufacturing concern that Eagle has already said will make as many as 80% of its computers in the future. The terms of that deal call for Eagle to get $5.4 million from the inventory sale.
The agreement announced Tuesday is the second that Eagle has made with creditors to reduce its debts. In January, it persuaded its trade suppliers to erase about $5 million in overdue payments in exchange for Eagle stock. The deal gave the creditors a 25% stake.
