Kushner-Locke Says It Might Default on Loans

Kushner-Locke Co., which produces and distributes movies and TV shows, said it’s “materially” over its borrowing limits, may be in default on its loans and won’t make bond payments due Friday.

The Los-Angeles based company said it doesn’t believe it has enough cash to pay the amounts due to Chase Manhattan Corp., according to a Securities and Exchange Commission filing.

Because of that, the company is prohibited from making any payments on its 13.75% convertible subordinated debentures and 8% convertible subordinated debentures due Friday.

Kushner-Locke said that even if it isn’t in default under the loan agreement with Chase, it doesn’t expect to be able to pay the principal due when the bonds mature. That would constitute a default on the bonds, the company said.

Kushner-Locke executives couldn’t be reached to comment.

Kushner-Locke shares Wednesday fell 9 cents, or 38%, to 16 cents on the Nasdaq Stock Market. The shares have fallen 96% this year.