Once-Promising Eagle Computer Files Chapter 11
GARDEN GROVE, Calif. (AP) _ Eagle Computer Inc., the once-promising computer maker that has been struggling for two years to overcome severe financial problems, has sought protection from creditors under Chapter 11 of federal bankruptcy law.
″Management has decided the only practical approach is to attempt to restructure remaining obligations through the court system,″ Eagle’s president and chief executive, Gary Kappenman, said late Tuesday.
For more than a year, the Orange County company has been trying unsuccessfully to get its creditors to agree voluntarily to a financial restructuring.
Eagle currently has about $7 million in long-term and short-term debt.
Its debt reached a peak of $19.7 million in March 1984. Of that amount, about $5.4 million has been paid off and another $7 million was converted into new Eagle stock.
However, some of the company’s creditors wouldn’t agree to accept the stock-for-debt conversion proposed by Eagle.
″Our goal is to do everything possible to see that our creditors eventually recover what is owed them, that the company return to profitability as soon as possible and that our stockholders ... get the highest possible valuation for their stock,″ Kappenman said.
He said the company hopes it will be able to emerge from Chapter 11 by Sept. 1 - a relatively quick bankruptcy turnaround.
Asked if that indicates the company already has worked out specifics of its reorganization, Eagle spokesman Richard Thunen said only, ″No details have been released.″
But Thunen added, ″We have given a lot of thought to restructuring over the past two years.″
For the first quarter ended March 31, Eagle lost $2 million. It has run up about $43 million in losses since it was founded in 1981, Kappenman said.
The company, which specializes in making IBM-compatible computers, first attempted to go public in 1983.
But its president at the time, Dennis Barnhart, was killed in an auto crash June 8, 1983, just hours after the public stock offering. In a rare move, the company rescinded the stock issue because the company’s fortunes had been tied closely to Barnhart.
When the stock was re-issued later that year it was snapped up quickly by investors because Eagle appeared to be growing quickly and to have good prospects.
But because of intense competition, Eagle’s fortunes dropped sharply soon thereafter, and the company has never recovered.
Kappenman took over the company in February 1985, when Eagle was on the brink of bankruptcy. Since then, the firm has consolidated operations, laid off workers and moved some operations overseas to take advantage of cheap labor.
Currently, the company has only a skeleton staff of seven full-time and six part-time workers, compared to its peak of 330 employees in March 1984.