Logan Industries seeks Chapter 11 protection
Contract manufacturer cut work force by 65 percent last year, expects recoveryApril 5th, 2002
Logan Industries Inc., a Spokane contract electronics manufacturer that launched three years ago as a spinoff from Liberty Lake-based Telect Inc., has filed for protection from creditors under Chapter 11 of the U.S Bankruptcy Code.
The company filed reorganization papers in U.S. Bankruptcy Court here March 18, and indicated that its revenues fell sharply last year as its high-tech customers began reducing orders as the economy faltered. In the filing, Logan listed total assets of about $2.8 million and total liabilities of about $2.7 million.
The company, owned by former Telect executive Harold Alexander, is located in the Spokane Business & Industrial Park. It currently employs about 70 people, down from about 200 workers a year ago, says Alexander. He says the reduction in employment took place over a period of months through a combination of attrition and layoffs.
The filing, says Alexander, puts us in a position were we have a little additional time to recover from the companys sharp decline in revenues last year. He says Logan has maintained good relationships with its customers, and remains current with its suppliers and lenders. He adds that hes extremely confident that the company will emerge from Bankruptcy Court protection and grow again.
The companys gross revenues in 2001 totaled about $8.2 million, down nearly 45 percent from the $14.9 million in revenues it posted the year earlier, according to its Bankruptcy Court filing. For the first two months of this year, it had revenues of just under $900,000, and its cash-flow projections indicate that it expects cash receipts to increase on a monthly basis between now and July, the last month for which projections are included.
Logan Industries primarily assembles cable harnesses that are used in electronic devices, but also builds finished assemblies. Among its customers, according to its filing, are Agilent Technologies Inc., Output Technology Corp., and Avista Labs.
Logans three secured creditors are Bank of America, which is owed about $2.7 million; Alexander, who is owed $475,000; and Spokane County, which holds an about $3,000 property tax lien on the company. It lists its largest unsecured creditor as a Kennewick, Wash., company called Manufacturing Services Inc., whose claim is just over $9,000.
According to the filing, Alexander has loaned Logan about $516,000 over the past 18 months.
Logan has two loans with Bank of America. One is an equipment loan with a balance of about $375,000, and on which the company is current in its payments. The other is a revolving line of credit with a balance of about $1.75 million, for which it also is current on payments. The loans are collateralized with Logans accounts receivables, equipment, current inventory, and various license and franchise intangibles, as well as a personal guarantee from Alexander and his wife, Lori, who together have a net worth in excess of $4 million, the filing says.
Alexander launched the company in the spring of 1999, after buying Telects diversified-products group, which did contract manufacturing.
Logan began with about 130 employees and expected sales its first year to top the $10 million in annual sales it had generated as a Telect division. It later, with a partner, opened a plant in Guadalajara, Mexico, that employed 30 people, but sold its interest in that plant to its partner last summer, Alexander says.
The company isnt the only contract manufacturer here or elsewhere to fall victim to the abrupt slowdown in the technology industry in 2000. A host of other Spokane contract manufacturers have suffered as well, including Tate Technology Inc. and Accra-Fab Inc., both of which laid off workers last year. Meanwhile, Logans largest customer, Agilent, also has announced significant cutbacks, and the company that spun Logan off, Telect, has cut its work force by more than half.