Quantum to make up to $40 million prepayment of senior secured credit facility

By Angela McDaniels

Tacoma, Wash., April 16 - Quantum Corp. agreed to prepay $40 million of its senior secured credit agreement as a condition to an amendment made Wednesday, according to an 8-K filing with the Securities and Exchange Commission.

Quantum expects to fund this with a prepayment of $40 million of future royalties due to the company under an original equipment manufacturer agreement.

The amendment will allow the company to prepay its remaining outstanding 4.375% convertible subordinated notes due 2010 once $135 million of the convertibles have been refinanced with qualifying debt.

If Quantum purchases at least $135 million of the convertibles with the proceeds of qualifying debt under its pending tender offer or by other means, it will prepay an additional $20 million of loans under the credit agreement.

The amendment also eliminated some reductions to Quantum's annual requirement to make mandatory prepayments of the loans under the credit agreement with excess cash flow.

Credit Suisse is administrative agent.

Quantum began a tender offer for up to $142 million of the convertibles on March 27 that ends May 12.

The company is offering $700 for each $1,000 principal amount of convertibles and plans to finance the offer with proceeds of a term loan it expects to receive from EMC Corp.

San Jose, Calif.-based Quantum is a storage company specializing in backup, recovery and archiving.

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