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SCOTT BARANCIKThe company would hand over near-total control to bondholders, including its chairman.
Reptron Electronics Inc. said Monday that it has a tentative deal to satisfy bondholders it currently can't pay.
Under the proposed agreement, investors holding $76.3-million worth of Reptron bonds scheduled to mature in August 2004 would instead receive new notes - plus common stock totaling 92 percent to 95 percent of all shares outstanding, or near-total control of the Tampa manufacturing company.
Among the bondholders is chairman and chief executive Michael Musto, who owned 33 percent of company stock as of May 16. The existing bonds earn interest at a rate of 6.75 percent. Reptron did not disclose the rate on the replacement notes.
"We are pleased to have reached this agreement," president and chief financial officer Paul Plante said in a news release. "This restructure should allow Reptron to continue to operate its business, further enhancing Reptron's ability to successfully meet its customers' requirements."
Reptron said the preliminary deal was reached with an "ad hoc committee" of bondholders but must meet a variety of conditions to be concluded. If successful, the bond debt will be reduced to $30-million. If not, debtholders might force the company to liquidate.
How current shareholders will respond to the agreement is not known. Reptron issued its news release after the market's close Monday, and company officials were unavailable for comment.
Reptron's stock rose 2 cents per share Monday to close at 38 cents.