Creditors circle above cash-strapped Digital LightwaveBy JEFF HARRINGTON, Times Staff Writer
© St. Petersburg Times
published April 11, 2003
CLEARWATER -- The noose is tightening around Digital Lightwave Inc. as the company's biggest creditor and principal manufacturer both seek millions of dollars in unpaid bills.
The Clearwater tech company's largest creditor, CIT Technologies, filed suit in Pinellas Circuit Court this week, seeking damages of $16.5-million as well as the return of all equipment it has leased to Digital.
Separately, Digital disclosed in a filing with the Securities and Exchange Commission Thursday that the lead manufacturer of its fiber-optic testing equipment and another creditor have started arbitration proceedings seeking a total of $7.5-million.
Digital executives did not return calls for comment Thursday.
However, in SEC documents, the company reiterated that it lacks the short-term resources to pay its current liabilities. Digital already has borrowed $1.9-million from Optel, a company controlled by its founder, chairman and majority stockholder, Bryan Zwan. Digital is trying to increase its credit line from Optel to as much as $10-million and seeking other sources of financing.
In the meantime, it has hired Raymond James & Associates to review its alternatives. In the latest developments:
-- CIT Technologies, which is based in Texas, said in a lawsuit that it loaned Digital equipment worth at least $12-million through lease arrangements dating back to 1999. CIT said it terminated the leases after Digital stopped paying rent on the equipment Oct. 6. Since then, CIT said, Digital has neither returned the equipment nor made payments. Diane Wells, a Miami attorney representing CIT, declined comment beyond the lawsuit.
webfeedyear ago Digital signed a deal to outsource nearly all its manufacturing to Jabil Circuit of St. Petersburg as a cost-cutting move. In addition to production, Jabil was put in charge of warranty and repair work for Digital customers overseas.
Jabil spokeswoman Lisa Allison declined to discuss the company's current arrangement with Digital or say if it was trying to recoup unpaid bills. "They're a customer," she said, "and we never discuss customers under any circumstance."
Digital was briefly a Wall Street star despite SEC charges of accounting irregularities in the late 1990s.
Fueled by dot-com fever, Digital's stock surged as high as $150 a share in early 2000, making it the best-performing public company in the bay area and putting Zwan on Forbes magazine's list of the 400 richest Americans.
Its business and its stock both tumbled during the dot-com bust and have never recovered. Stock in Digital closed Thursday unchanged at 75 cents a share.
-- Jeff Harrington can be reached at firstname.lastname@example.org
or (813) 226-3407.
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