Calling it a "fresh start," Orban/Circuit Research Labs Inc. said it reached agreement in principle with Harman International Industries Inc. to restructure Orban/CRL's debt.
The deal involves the offering of new stock, a $1 million payment to Harman this month and a new schedule of payments for the next five years. As part of the deal, Harman becomes a 19-percent shareholder in the manufacturing company.
Circuit Research Labs had purchased Orban from Harman in 2000; the debt dates to that sale. Jay Brentlinger, president/CEO and chairman of Orban/CRL, said Harman continues to be supportive.
"We will now have an opportunity for a fresh start to move the company forward ... We especially welcome having a great company like Harman as a significant shareholder."
CRL said it would issue $1.5 million in common stock to raise cash. It then must make a $1 million cash principal payment on its outstanding debt to Harman by the end of April. Harman agreed to let CRL keep the rest of the money raised in the stock offering.
Harman also agreed to exchange $3.5 million principal of the debt plus an outstanding warrant to purchase shares of CRL stock, for enough stock that Harman will own 19 percent. And Harman will exchange the remaining $3.982 million plus accrued interest due from CRL into a single, senior note with an interest fixed at 1.5 percent above prime rate.
Mandatory principal payments will be required annually for the next five years. Interest will be paid monthly; principal will be payable at the rate of $250,000 per year for the first two years, $500,000 per year for the following two years, and the balance due at the end of five years.
The transaction is conditioned upon the $1million payment due this month.
Info: www.crlsystems.com and www.orban.com.