Newer Technology, one of the first manufacturers of Macintosh upgrade cards, is facing bankruptcy, unless its creditors agree to hold-off on demanding payments until February 2001.
The company has asked creditors to sign a "forbearance agreement’, delaying loan repayments until it has dealt with its current financial problems.
Newer currently has liabilities totalling $14 million, with assets of only $5 million and an operating capital of $9 million.
Newer's chief operating officer, John Nelson, in a letter to creditors, admits: "We have not been a model of efficiency in taking care of our own business. Clearly that has to change, and we intend to change it." Symbolic of the change has been the addition of two TRI-M employees to the management team, and the disappearance of most of Newer's previous management team, including Jeff Alholm.
The one-year plan to turn the company around depends on the support of Singapore-based company TRI-M. TRI-M, one of Newer's manufacturer's, bought Newer shares in June last year, and has now agreed to make unsecured loans for the company's operating expenses for a year. Newer owes TRI-M $4 million. TRI-M has specified that the loans are not to pay off old debts.
There are more strings attached, including giving TRI-M substantial management control, a certified audit and the receipt of one year forbearance agreements from its creditors. Without these the deal fails and the company will be forced to file for bankruptcy.
Stephen Hawkins, of Newer's UK distributor AM Micro, refused to comment on the financial crisis, but said: "Newer are shipping products in significant quantities." He did indicate that his firm was "aware" of what Newer is doing, though Newer had made no comment at the time of writing.
Andrew Michie, of Newer's previous distributor IMC, said: "They make great, consistently good products. They have been bled dry of cash through a series of bad management decisions over the years. I wish that they'd get the chance to pull themselves out of this."
Industry insiders express doubts that Newer will be able to persuade its creditors to wait a year, bearing in mind its $5,000,000 assets against $14,000,000 liabilities. The decision whether to file for bankruptcy or continue trading with the help of TRI-M will be taken on February 15.