Everest & Jennings International Ltd., a struggling wheelchair manufacturer in Camarillo, has completed a debt-restructuring agreement that would ease the company's debt burden and give a New Zealand investor a controlling stake in the company.
The agreement, covering the restructuring of $46 million of debt, would effectively reduce that debt burden by about $33 million, the company said. The plan is still subject to shareholder approval, which the company expects to obtain at an annual meeting of stockholders in January.
Under the proposal, Industrial Equity (Pacific) Ltd. would be repaid $6 million of the $15 million it has lent to Everest & Jennings. IEP is a Hong Kong investment arm of Brierley Investments Ltd., a holding company controlled by New Zealand investor Ronald Brierley.
The remaining $9 million would be exchanged for interest-bearing convertible preferred stock, which would raise IEP's equity ownership in the company to 53% from its present 30%. IEP already has voting control of the company because it has voting rights to a large number of shares held by other stockholders.
Also as part of the agreement, Robert G. Sutherland, head of IEP's North American operations, again becomes chairman of Everest & Jennings, effective immediately. He had given up the post to Robert C. Sherburne in October to avoid a conflict of interest in the negotiations between IEP and Everest & Jennings.
The plan also calls for Security Pacific National Bank--which holds $31 million of the debt being restructured--to get a separate new class of convertible preferred stock that would represent nearly a 5% stake in Everest & Jennings. In exchange, Security Pacific would effectively extend the repayment periods of the debt it holds.
"Upon approval of the full restructuring, the company will be stronger financially and have a majority stockholder of substantial financial strength," Barre L. Rorabaugh, Everest & Jennings' president and chief executive, said in a statement.
To help repay the remaining debt, Everest & Jennings said it plans to sell two major assets. One is its Germany-based Ortopedia GmbH unit, which makes wheelchairs for the European market and which contributed 36% of Everest & Jennings' $209 million in revenue last year.
The company also plans to sell its headquarters and manufacturing plant in Camarillo, after which it would lease back part of the facility for its needs.
Everest & Jennings, once the nation's largest maker of wheelchairs, got into trouble with a failed diversification effort in the 1980s, marketing mistakes and excessive overhead costs. But its cost-cutting efforts in recent months have begun staunching the red ink.