Eagle Computer Proposes a Plan to Pay Off Its Debts

In what it hopes will end its lengthy battle to rid itself of a potentially fatal level of debt, Eagle Computer of Garden Grove said Friday that it has offered trade creditors a repayment plan that would nearly eradicate its delinquent unsecured debt.

At one point early last year, the once robust personal computer company’s total debt reached $19.7 million and Eagle was struggling to survive. It since has cut its delinquent unsecured debt to about $2.5 million.

Under the terms of the proposal, which has been approved by Eagle’s Creditors Committee, the Bank of America--Eagle’s secured creditor--and the California Commissioner of Corporations, the trade creditors will receive a cash payment representing approximately 10% of the amount due them.

They will have the option of accepting payment for the remaining 90% of the debt in the form of Eagle common stock at one share for each dollar of debt, or in a long-term, unsecured note with 12% annualized interest.

The proposed agreement covers virtually all of Eagle’s remaining unsecured debt, which totals approximately $2.5 million. Proceeds for the cash payment will come from funds generated by the sale of a portion of Eagle’s parts inventory to ACECO Electronics Co. Ltd., the Korean firm that is now manufacturing Eagle computers for resale by Eagle.

“This new plan, if it is accepted by the majority of our creditors, will result in Eagle’s short-term debt being reduced . . . to under $1 million,” said Shelley Valk, Eagle’s vice president of finance. All of the remaining short-term debt is current, according to a company spokesman.