Kaypro and lender Commonwealth Financial Corp. have agreed to an “interim plan” by which Kaypro will pay off $3.5 million of the $8-million line of credit debt Kaypro owes to Commonwealth.
The $3.5 million is the part of Kaypro’s debt that is secured by inventory and accounts receivable, a Kaypro spokesman said Monday. The interim plan will be instituted while Kaypro, a Solana Beach computer manufacturer, seeks a “permanent solution to its financial needs.”
Hit by losses and lower-than-expected sales, Kaypro has been chronically short of cash in recent quarters. Kaypro Chairman Andrew Kay has made $2.3 million in personal loans to Kaypro over the two most recent quarters so that the company could pay its bills.
The agreement came after Commonwealth demanded that Kaypro present a restructuring plan to “retire certain debt.” The deadline for agreement on the plan was Oct. 1, but was extended by Walnut Creek-based Commonwealth to Oct. 14.
Kaypro will meet with Commonwealth officials in early November to “review the interim plan and the company’s progress toward replacing or reducing these lines of credit,” the company said in a statement.