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STM Wireless Announces It's in Default

Financing: The Irvine-based satellite communications provider faces possible foreclosure.

May 21, 1999|JONATHAN GAW | TIMES STAFF WRITER

Irvine-based STM Wireless Inc. said it has defaulted on a $10-million line of credit, and the lender is threatening foreclosure, among other things.

STM, which provides satellite telecommunications in rural areas, said it was "not in compliance with certain covenants" of the credit arrangement with Wells Fargo HSBC Trade Bank that expired April 1, according to a report filed Thursday with the Securities and Exchange Commission.

Wells Fargo had set a deadline of last Monday to repay the debt of more than $9 million, STM said in its filing.

The company and lender are negotiating a settlement that may require STM to pay a portion of the debt or give Wells Fargo additional collateral, by issuing a second trust deed on the corporate headquarters or by assigning the lender rights to some of STM's patents and trademarks.

The company said other alternatives include issuing more shares, which would dilute the holdings of existing stockholders, or incurring further debt.

STM officials did not return calls seeking comment.

The company has lost more than $25 million since the beginning of 1996.

As of the end of March, the company had $8.9 million in cash and short-term investments, down from $11 million at the end of December.

The company has been hit particularly hard recently by weaknesses in its Latin American and Asian markets, and the company also has undergone a restructuring.

Last month, it agreed to be acquired by San Diego-based Remec Inc., only to have that deal called off earlier this week.

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