Reptron Electronics files for voluntary Chapter 11 to restructure convertibles

By Carlise Newman

Chicago, Oct. 28 - Reptron Electronics Inc. filed for voluntary Chapter 11 bankruptcy protection to implement a restructuring of its 6¾% convertible notes through a pre-negotiated plan. In addition, the company has a commitment for $20 million in debtor-in-possession financing from CIT Group.

Under the proposed plan of reorganization, the company's existing convertible notes which total $76.3 million, along with all accrued and unpaid interest, will be exchanged for new notes with a total balance of $30 million. The new notes will have a five-year term and will carry a 7% annual interest rate during the first two years and an 8% rate during the remaining three years.

The current noteholders will also receive 95% of the company's outstanding common shares.

On June 30, Reptron announced that it had reached an agreement in principle with an ad-hoc committee representing 56% of the outstanding notes. Along with the members of the ad hoc committee, holders of an additional 17% of the notes have expressed support of the plan.

Reptron said it has voluntarily chosen a bankruptcy filing to complete the debt restructuring as it likely provides the shortest time frame for completion.

Since June 30, the company, its current senior secured lenders and the ad-hoc committee have negotiated the terms of the restructuring included in the pre-negotiated reorganization plan. Reptron anticipates that the bankruptcy court will confirm the plan of reorganization within 90 days to 120 days, and that the company will emerge from bankruptcy as soon as practicable thereafter.

Reptron intends to continue operating under Chapter 11 consistent with its ordinary course of business practices.

In conjunction with the filing, CIT Group/Business Credit, Inc. has committed to provide $20 million in DIP financing to fund the company's operations during the Chapter 11 proceedings.

The DIP facility, together with the company's available cash reserves and cash provided by operations, is expected to provide sufficient liquidity for the company to pay for goods and services within standard terms.

"Through the recent sale of our distribution and memory module divisions, Reptron has generated over $20 million in cash proceeds and exited those businesses which accounted for the majority of our recent operating losses. Once the restructuring is completed, Reptron will have reduced its debt load by over $73 million, and over 60% of the company's debt which was outstanding when we entered 2003 will have been eliminated," said company president and chief operating officer Paul J. Plante in a news release.

William Elson, a member of the board of directors since 1994, resigned from the company's Board. The company said Elson's resignation did not involve any disagreement with the company on any matter relating to the company's operations, and Elson has not requested that any matter be disclosed.

Based in Tampa, Fla., Reptron is an electronics manufacturer.

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