Dense-Pac Microsystems said it has obtained $1.3 million in credit from Tokai Bank of California in the form of a three-year term loan of $500,000 and a revolving line of credit of $800,000.
Part of the funds will be used by the Garden Grove maker of computer memory devices to pay off existing debt of about $795,000. The remaining credit line will be used as working capital, the company said.
Separately, Dense Pac reported net income for its fiscal 1989 second quarter ended Aug. 27 of $110,190, a 14% decline from the $128,112 reported a year earlier. Sales for the three months were $1.5 million, down 6% from the year-earlier $1.6 million.
Earnings Up 1,400%
For the first six months, the company posted earnings of $350,952, more than 14 times the $25,890 posted in the first half of its fiscal 1988. Sales of $3.3 million were up 13.8% from $2.9 million a year earlier.
The new credit line for Tokai Bank, according to William Stowell, Dense-Pac's chief financial officer, will enable the company to pay off its former bank, which has been reluctant to expand the company's credit. Debt incurred last year as Dense-Pac plunged into bankruptcy reorganization in February and emerged 10 months later already has been paid off, Stowell said. The borrowings from Tokai Bank, he said, will represent the bulk of Dense-Pac's long-term indebtedness.
James Turner, Dense-Pac's chairman and chief executive, said the credit agreement will enable the company to finance anticipated expansion of the company's sales effort, which could include acquisitions of complementary companies.