Reptron negotiating forbearance with bank lenders

By Carlise Newman

Chicago, Aug. 19 - Reptron Electronics is negotiating a forbearance agreement to its credit agreement - and warned that if it is not obtained it may have to file for bankruptcy protection.

On Aug. 13, the lenders proposed a forbearance agreement for the existing defaults under the credit agreement, in which they will forbear from exercising the remedies available to them under the agreement, according to a filing with the Securities and Exchange Commission. The proposed forbearance agreement reduces the size of the credit agreement to $35 million from $60 million.

If Reptron is unsuccessful in negotiating a forbearance agreement, the lenders may terminate the credit agreement or substantially reduce the amount available. In either event, it is unlikely that Reptron would be able to continue operations without filing for bankruptcy protection, the company said in a filing with the Securities and Exchange Commission.

Also, Reptron said Tuesday it owed $76.3 million under its 6¾% convertible subordinated notes due August 2004 as of June 30 and remains in default of the notes for its failure to pay interest due on Feb. 1 and Aug. 1, as earlier reported.

Reptron said on June 30 it reached an agreement on a term sheet to restructure the notes.

If the transaction is concluded as outlined in the term sheet, the original notes will be exchanged for both new notes and between 92% and 95% of the company's common shares outstanding; the debt represented by the original notes will be reduced to $30 million from $76.3 million.

Reptron is a Tampa, Fla.-based electronics manufacturer.

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