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Ampex standstill agreement terminated, Hillside demands $2.7 million notes payment
By Caroline Salls
Pittsburgh, Jan. 17 - Ampex Corp.'s standstill agreement with Hillside Capital Inc. has been terminated, effective Jan. 14, and Hillside has demanded payment of $1.3 million of outstanding principal and $1.4 million of interest on the Hillside notes within 10 days, according to an 8-K filed with the Securities and Exchange Commission.
As previously reported, the standstill agreement was intended to give Ampex until Jan. 15 to negotiate a restructuring plan for its Hillside debt.
Ampex said the negotiations have not been successful so far, but Hillside is willing to continue the talks.
According to the 8-K, based on Ampex's current cash position, the company will most likely not be able to repay all of the $2.7 million due to Hillside within 10 days. As a result, Ampex said it will continue its efforts to negotiate a restructuring.
In addition to the demand for payment, the filing said Hillside also reasserted an allegation that Ampex has breached the agreement.
If Ampex does not make the principal and interest payments and cure the alleged breach, it will prompt an event of default on the agreement, entitling Hillside to accelerate repayment of the $48.7 million of outstanding principal and interest on the notes.
According to a company news release, $6.5 million in additional principal and interest payments are due on the Hillside notes in 2008.
In addition, Ampex said any acceleration of payment on the Hillside notes could also result in an event of default under the company's other debt, including $6.7 million of its senior notes due 2008.
If the senior notes payments are accelerated, Ampex said it would be forced to file for bankruptcy.
Ampex is a Redwood City, Calif., technology licensing company.
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