San Jose, California-based Maxtor Corp reports that it has reached separate agreements with Foothill Capital Corp and Standard Chartered Bank Plc modifying terms of their existing agreements with the company. The effect is that Maxtor’s asset-based line of credit of up to $70m with Foothill has been amended to ease various covenants, including the financial covenant related to tangible net worth of the disk drive manufacturer. Maxtor had required a waiver of the covenant with respect to its results for the quarter ended June 29, 1991, and had indicated in its Form 10K filing that additional waivers might be required in subsequent quarters if an amendment were not obtained. Maxtor has also agreed to register for sale for the 45-day period starting October 26, 712,000 Maxtor shares held by Standard Chartered and has made a principal repayment to the bank of $2.5m against a total debt of $20m. It will not now be required to issue warrants to the bank, earlier estimated at about 1.1m shares, and the interest rate on the remainder of Maxtor’s debt to the bank has been reduced to 12.5% from 13%. The principal will be further reduced by the proceeds the bank gets from its sale of its Maxtor including a second block of 712,000 shares. When Maxtor bought MiniScribe, it took 1.42m shares then worth $14 to cover $20m of the purchase price.
