Pacific Aerospace & Electronics noteholders to make loan

New York, Jan. 11 - Pacific Aerospace & Electronics, Inc. said it revised its lock-up agreement with its noteholders, allowing one or more noteholders to make a new $36 million five-year senior secured loan to the company.

The new loan will be at a discount. Proceeds of $22 million will be used to pay off the existing senior secured debt, for working capital, to pay restructuring fees and expenses and for general corporate purposes.

Interest on the loan will be at 5%, in addition to the discount.

Pacific Aerospace & Electronics' lock-up is with holders of 97.5% of its 11¼% senior subordinated notes.

The agreement covers a restructuring plan for the Wenatchee, Wash. company's debt and equity. After the restructuring, which will be achieved through an out-of-court exchange of the notes for stock, preferred stock and new notes, the noteholders will own 97.5% of Pacific Aerospace's equity.

The company said it expects to complete the restructuring and fund the new loan by the end of February.

Pacific Aerospace had an agreement to waive defaults on its senior debt that expired on the senior debt's maturity date of Dec. 31, 2001. The company also failed to repay the loan on its maturity date. The lenders have the right to take action, including foreclosure but have not done so and Pacific Aerospace said it does note believe they will do so if the new senior loan is obtained.

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