Acterna Corp. disclosed yesterday that it has defaulted on its long-term debt, after two years' worth of layoffs following steady revenue declines.
Acterna, a Germantown company that primarily makes gear to test telecommunications networks, decided not to make an interest payment of about $6.7 million on $680 million of its bank debt, said Jim Monroe, a spokesman for the company.
"We have not finalized the form of a restructuring," he said. The company could have paid the interest on its defaulted debt but Acterna decided not to make the payments because it is still negotiating with creditors, he said. The decision was disclosed yesterday in a filing with the Securities and Exchange Commission.
At the end of December, the company had reported to the SEC that it had $968.6 million in total debt and $88.2 million in cash and cash equivalents.
The company had also said it hired legal and financial advisers to help it restructure, which could involve a Chapter 11 bankruptcy filing or an out-of-court deal struck with its senior lenders. The company said in the December filing that the value of its existing common stock would probably be wiped out in any restructuring.
Last month, the company announced that it replaced chief executive Ned C. Lautenbach with John R. Peeler, the president of Acterna's largest division, its telecommunications unit. Lautenbach remains chairman of the board.
Acterna moved to its corporate headquarters to the Washington area from Massachusetts just over a year ago. It has continued to suffer from a three-year-long dry spell in the telecommunications industry. The market for network equipment that makes up roughly 80 percent of Acterna's business has been hit particularly hard.
Acterna has been trying to adjust to tough times in part by laying off its workers. At the end of last year, it employed 3,217 people, down 1,658 from a year earlier.