California Amplifier, a maker of components for satellite-dish systems, said Tuesday that it will seek bankruptcy protection if it fails to reach new agreements with its creditors by April 14.
The four-year-old Camarillo company also disclosed that it is discussing the possibility of a merger with a privately held military electronics firm to try to resolve its financial problems.
Along with other companies that make equipment for satellite-dish antenna systems, California Amplifier has suffered recently as several television services have begun scrambling their signals. Many consumers have stopped buying the equipment because they fear they no longer will be able to receive much of their programing for free.
California Amplifier plans to ask its creditors today to allow it to temporarily defer payment on its debts. Last week four creditors, including Torrance-based Mitsubishi Electronics America and General Circuits of Menlo Park, filed suits against California Amplifier seeking payment of about $800,000.
The company is trying to reach a compromise with its creditors before an April 14 hearing begins on Mitsubishi’s claim in Ventura County Superior Court.
“We want to work something out,” said Donald Davies, president of General Circuits. “The trouble is, when somebody owes us money, then we owe our suppliers.”
Sales of satellite-dish equipment have slowed nationwide largely because 20 television services--representing roughly 25% of available satellite programing--have announced they have scrambled or will scramble their signals, according to the Society for Private and Commercial Earth Stations of Alexandria, Va.
Home Box Office and Cinemax, two leading pay-television services, began scrambling their signals Jan. 15.
Two other major services, Showtime and the Movie Channel, plan to do the same in May.
To receive that programing, satellite-dish owners will have to buy descramblers and pay monthly fees.
California Amplifier was suffering even before the signal scrambling began. During the nine months ended Nov. 30, California Amplifier lost $1.1 million as its sales declined 29% to $11.2 million.
Donald W. Fuller, chairman of California Amplifier, said the company also will show significant operating losses in the fourth quarter and fiscal year ended Feb. 20.
The company has been phasing out its manufacturing operations since February, cutting its work force so far from 250 to 90. Another 20 factory workers will be dismissed in the next several weeks.