Firm Seeking OK to Offer New Shares : Eagle Computer Fighting to Survive

Continuing its effort to survive the ongoing shakeout among personal-computer makers, Eagle Computer Inc. of Garden Grove said Tuesday it is seeking shareholder approval for a new stock offering that could be used to finance new products.

In letters to its 15,000 shareholders, Eagle asked for permission to issue an additional 10 million shares of common stock and a new class of 1 million preferred shares. Currently the company’s charter sets the limit on common shares at 25 million.

The company’s request comes less than one year after industrywide problems, as well as Eagle’s own miscues, nearly forced it into bankruptcy.

In the months since its brush with insolvency, Eagle has cut its debt by nearly 85%, in part by issuing stock to creditors, has sold off its surplus inventory of finished products and supplies and has arranged for its computers to be manufactured in Korea.

Despite the company’s accomplishments, industry analysts say that the persistent sales slump throughout the computer industry leaves Eagle in as precarious a position as ever, a factor that could cloud its efforts to issue new stock.

However, Joseph Kapka, who follows computer companies for Bateman Eichler, Hill Richards Inc. of Los Angeles, said Eagle still has a chance to sell some new shares.

“It’s always possible for something to happen,” he said. “Osborne Computer did a deal while they were in Chapter 11 (bankruptcy reorganization), so anything is possible.”

Richard Thunen, Eagle’s senior vice president for planning, said the authority to issue new stock would give the company the flexibility it needs to pursue new opportunities without having to dip into its meager stash of cash. He said that the company has nearly exhausted its limit of 25 million outstanding shares by paying off its creditors with stock.

Thunen said the company has no specific plans for the new stock but added that Eagle could use the shares to raise money to bankroll a new product line planned for next year or to acquire the technology of another computer services company.

However, Thunen said the company would probably not put any newly authorized shares on the public market, preferring instead to seek a private placement or a compatible computer company.

Investors in the public market, Thunen said, “already have ample opportunity to buy our stock now.”