Wheelchair Maker May Get a Push
The majority shareholder in Everest & Jennings said it may invest more money in the struggling Camarillo wheelchair manufacturer as the company scrambles for crucial financing for day-to-day operations.
But in two letters written last Wednesday to Everest & Jennings, the shareholder, Industrial Equity Pacific Ltd., said payments on $14 million in loans it previously made to the wheelchair manufacturer are overdue.
Industrial Equity Pacific Ltd. (IEP), an investment company that owns 51% of Everest & Jennings’ Class B stock, said that it will not immediately demand payment on the loans, but said that it could, under a variety of circumstances.
Once the nation’s dominant wheelchair manufacturer, Everest & Jennings has been struggling to recover from a disastrous attempt to diversify into other medical products during the 1980s. In 1989, the company lost $42.1 million on sales of $183.9 million due mainly to restructuring costs, inventory writedowns and costs of starting new products.
In the three months that ended June 30, Everest & Jennings lost $4 million compared to a $5.5-million loss during for the same period a year ago. Sales for the quarter rose 15% to $52.8 million from $45.9 million a year before.
IEP has been extending the due date of $14 million in loans on a daily basis since the loans came due Aug. 15. The extensions are continuing, said Raymond Thomas, chief financial officer of Everest & Jennings.
IEP, which is controlled by New Zealand investor Ronald Brierley, acquired controlling interest in Everest & Jennings after one of its co-founders died in November.
Last month in a filing with the Securities and Exchange Commission, IEP said it was considering making a proposal to increase its holdings in Everest & Jennings by buying more stock or swapping some of the $14 million in debts for stock or securities that can be converted into stock. IEP said the effective per-share price it would pay under such a deal “could be substantially below recent market prices for the shares.”
Everest & Jennings’ Class A shares have tumbled in recent years. The stock closed at $2.25 per share Monday, down from a high in 1989 of $11.38.
Everest & Jennings has been trying to replace about $55 million in various lines of credit that it needs to maintain daily operations. Security Pacific, the company’s main lender, has informally extended a $31-million line of credit on a daily basis since July 31.
Renewing its credit lines and working out a financing agreement with IEP are “necessary in order for E&J; to continue operations on a sustained basis,” Everest & Jennings said in April.
But the company has yet to reach an agreement with various lenders, including Security Pacific, to replace the $31-million line of credit, plus some standby letters of credit and other borrowings totaling another $24 million.
Earlier this year when Everest & Jennings ran into trouble in the bank negotiations, IEP stepped forward with the $14 million in emergency financing.
