Pacific Aerospace fails to pay interest on senior debt, obtains waiver

New York, Oct. 9 - Pacific Aerospace & Electronics, Inc. said it obtained a waiver of defaults from the holders of its 18% senior secured debt after failing to make the quarterly interest payment due Sept. 30 on the debt within the five-day grace period. The Wenatchee, Wash. company was also in default on the senior debt because it failed to make the Aug. 1 interest payment on its 11¼% senior subordinated notes.

Pacific Aerospace said late Friday that the holders of the senior debt have agreed to amend their loan agreement to waive the defaults until Dec. 31, 2001. The amendment also accelerates the maturity to Dec. 31 and increases the interest rate to 21% from 18%. In addition, the company said it agreed to pay a 200 basis points transaction fee on the outstanding principal, equivalent to $288,658. Both the transaction fee and the Sept. 30 interest payment will be paid in kind instead of cash.

Pacific Aerospace previously announced it has entered into a lock-up agreement with the holders of approximately 98% of the senior subordinated for a planned restructuring of the company's debt and equity outside of bankruptcy.

For the restructuring to go ahead, the waiver had to be obtained from the senior debt holders, Pacific Aerospace said.

"We are pleased that our senior secured lenders have agreed to cooperate with us and with the noteholders in the restructuring of our debt," said Don Wright, president and chief executive officer of the company, in a news release.

Pacific Aerospace said it is working with noteholders to obtain new commercial financing to replace its senior debt and to provide working capital.

Pacific Aerospace also said it has discontinued efforts to sell its U.K. subsidiary, Aeromet International PLC. Proceeds would have been used to repay debt.

"Our heavy debt load was the primary impetus for selling Aeromet," Wright said. "Assuming the restructuring is completed as contemplated, our debt load should be significantly reduced. We look forward to retaining this capacity to better serve our global customers."

End

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.