The Tampa electronics company expects to re-emerge in 90 to 120 days with its major debts reorganized.
By JEFF HARRINGTON
Published October 29, 2003
TAMPA - Reptron Electronics filed a prenegotiated bankruptcy reorganization Tuesday afternoon in its bid to escape debt payments that threaten its survival.
The Tampa electronics manufacturer said the purpose of its Chapter 11 filing in U.S. District Court in West Palm Beach is to let it restructure a $76-million bond payment due in August 2004.
"No one forced us into bankruptcy," said Reptron president and chief operating officer Paul Plante. "We chose to take this route."
In January, Reptron stopped making interest payments on the bonds, noting it would be unable to pay the debt in full in 2004. The bonds carry a 63/4 percent interest rate.
Under the proposed renegotiation, the bonds will be converted to a five-year note and the principal balance will be cut significantly to $30-million. Reptron's interest rate will be 7 percent for the first two years and 8 percent for the last three years.
That means Reptron could save just over $3-million in each of the first two years in interest costs alone.
Reptron reached those terms in June with a majority of its bondholders but found it arduous to negotiate with hundreds of small investors that held a combined total of less than 20 percent of the bonds.
Under the bankruptcy option, the renegotiated terms only have to be approved by two-thirds of bondholders; Plante said the company already has received approval of 75 percent.
By going through bankruptcy, Reptron also limits its legal liabilities as it gains protection from suits by bondholders or shareholders.
It expects to emerge from reorganization within 90 to 120 days.
Plante said the filing does not affect Reptron's current obligations to suppliers and employees.
"Other than the bondholders, we're not asking anyone to take anything less than 100 cents on the dollar for anything they're owed," he said. "All of our creditors are paid in full and on time right now."
Throughout the year, Reptron has been trying to trim down and reinvent itself amid a slow upturn in its core business of making electrical components. In May, Reptron agreed to sell its electronics distribution business to Jaco Electronics of Hauppauge, N.Y., for $10.4-million. On Monday, the company said it is selling its memory module division to All Components Inc. of Farmers Branch, Texas, for $9.1-million. In the second quarter ended June 30, Reptron cut its losses from continuing operations to $1.9-million, or 30 cents a share, down from $3.1-million, or 48 cents a share, in the year-ago quarter.
Last month, Reptron was delisted from the Nasdaq SmallCap Market for failure to meet minimum requirements.
Its stock closed Tuesday at 25 cents a share, up 2 cents, before it released news of the bankruptcy filing.
