CalComp Restructures Its Debt
CalComp Technology Inc., a struggling Anaheim maker of computer graphics peripherals, said it has reached an agreement to restructure $60 million in long-term debt owed to its majority owner, defense giant Lockheed Martin Corp.
The company also said it has hired the investment banking firm Salomon Smith Barney to advise it on “strategic alternatives.” It declined to elaborate.
Under the debt restructuring, Lockheed Martin will receive 1 million nonvoting shares of CalComp preferred stock, valued at $60 each. In return, CalComp’s revolving line of credit with Lockheed Martin will be cut to $13 million from $73 million.
CalComp said it expects to use the reduced credit line to meet its operating expenses in its third quarter ending Sept. 27. The improvement in its balance sheet means the company will continue to meet the requirements for trading its stock on Nasdaq’s National Market System.
However, CalComp warned that without additional funding it faces “material liquidity problems.” Lockheed Martin, which currently owns 86% of CalComp’s stock, may provide the additional funding, CalComp said. A company spokesman declined to provide details.
CalComp said it previously reached a tentative agreement with a bank for an additional $25 million credit line, but the negotiations were recently ended because they couldn’t agree on final terms.
In its first quarter ended March 29, CalComp lost $18.3 million, or 39 cents a share, as sales declined 38% to $37.8 million.
The company has pinned its hopes on its new CrystalJet technology, which it says enables commercial inkjet printing systems to produce photo-quality color images cheaper, faster and with a greater variety of inks. The technology has caught the eye of Eastman Kodak Co., which earlier this year said it would invest as much as $36 million in a joint venture to develop more uses for the process.
Last month, CalComp said that it doesn’t expect to record operating profits this year. It said it was encountering production delays in connection with ramping up the manufacturing of its CrystalJet printers.
The company’s announcement about the deal with Lockheed Martin was made after the stock market closed on Thursday. Its stock closed at $2.13 a share, down 6 cents.
