Merisel Inc, the debt-burdened El Segunda, California-based distributor, says that fundamental financial restructuring negotiations should be finalised within the next two weeks.
With debts standing at $300 million, it is talking with shareholders of Senior Notes due in 2004, looking to restructure these liabilities by converting about $125 million outstanding to straightforward common stock.
Merisel also wants to extend the maturity of senior debt held by Merisel Americas Inc, currently due by January 1998. The Americas subsidiary has unsecured senior borrowings of $56.8 million of Senior Notes plus $17.6 million of privately placed Subordinated Notes.
Additionally, $85 million in borrowings was outstanding at the end of 1996, plus $10 million of outstanding promissory notes.
The company?s debts will be reclassified according to the success of these negotiations. Dwight Steffensen, chairman and CEO, reiterated his belief that the company's long-term viability depends on restructuring the debt, saying: ?Merisel can only achieve long-term profitability if... debt levels can be reduced significantly.?
Conversion of notes would enable Merisel to avoid significant amortization payments in June this year, largely attributable to Merisel Americas? obligations. Merisel?s quarter to December 31, last year was the first profitable quarter in eight, when it reported profits of $1,675,000 on sales of $1,150,000,000, compared with a net loss of $77,256,000 for the fourth quarter 1995. Net loss for the year was $140,375,000.
Steffensen says that the conversion of debt to equity would enable Merisel to pursue future business plans and provide the permanent capital structure essential to growth.
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