Desperate EECO Inc. Considering Sale of Assets

EECO Inc., struggling to stave off bankruptcy, said Monday that its deal to sell its computer keyboard subsidiary to an unnamed buyer has fallen through and that it is now considering selling all other assets of the company.

EECO Chairman Robert B. Bonney said the sale of its Maxi-Switch keyboard unit was abandoned because EECO’s lender, Sanwa Bank in Los Angeles, rejected terms of the sale.

Bonney declined to identify the potential buyer.

“We’ll listen to any reasonable offer, but we don’t have anything to announce right now. The last thing we want to do is shut down,” Bonney said. “We can’t go on like this much longer, but we don’t have any drop-dead date at the moment.”

Bonney said EECO is discussing selling the keyboard unit to two other potential buyers. He said the company is also considering selling all or part of its other assets.

Maxi-Switch makes computer keyboards in Tucson, Ariz., and Sonora, Mexico; operates an electronic components division and a hotel computer division in Santa Ana, a key-pad division in Phoenix and a keyboard and switches division in Scotland. The company owes Sanwa Bank $10 million, and its credit agreement expired on March 31. The bank told the company that it will not extend any further advances to the company, but it has not yet declared the loan in default.

A default declaration would have a materially adverse effect on company operations, the company said, possibly forcing it to seek Chapter 11 bankruptcy protection.

“If the bank is not going to let them sell the company, there aren’t too many options besides Chapter 11,” said James Magid, analyst with Needham & Co. in New York.

Last week, EECO reported a loss of $10.3 million on revenue of $63 million for its fiscal year ended Dec. 31, 1989. The company attributed the loss to costs related to the closing and sale of its computer keyboard and hotel computer operations units, as well as a $6.7-million loss from continuing operations.