HEI Inc. filed for bankruptcy restructuring this week, saying it owes about $10 million to hundreds of creditors and is lining up buyers for its assets.
HEI, based in the southwest metro suburb of Victoria, has made micro-electronic parts for 47 years. It recently lost four defense and medical customers representing $10 million in sales, or about one-fourth of its annual revenue, the company said in a court filing on Monday.
The company's shares, which trade on the nontraditional pink sheets system, were valued at 7 cents each on Tuesday, down from $1 a year ago and 8 cents last week.
The contract manufacturer that specialized in microchips, flexible circuit boards and medical and hearing devices reported fiscal 2013 revenue of $45 million and a profit of $2 million.
Its restructuring comes after executives scrambled in recent months to find new customers. In September, Chief Executive Mark Thomas announced that he would step down to devote himself to sales and company expansion. He was replaced by Robert Heller, who was also chairman.
By November, however, HEI said it was exploring strategic alternatives, including the possible sale of the company, which has operations in Minnesota, Arizona and Colorado. Last month, employment had dropped from 110 to 88 workers across all three states.
The Chapter 11 bankruptcy petition filed on Sunday listed Thomas as CEO again. An attorney representing HEI, Jim Baillie of Fredrikson & Byron, said Tuesday that Thomas stepped back into the CEO role a few weeks ago and was "overwhelmed" with the details of the bankruptcy filing and potential sale of the company.
"We filed the petition late Sunday, and then we filed a lot of motions yesterday to get the court to approve the sale of the company or its assets," Baillie said.
One court filing showed a preliminary agreement to sell some non-real estate assets to HT Electronics LLC for $2.8 million. Five other prospective buyers have also submitted letters of intent seeking certain company assets.
"Another motion seeks permission to allow us to pay the employees their regular paychecks and benefits to a point, and to handle cash management and the use of existing bank accounts. In bankruptcy, the debtors are not allowed to spend any money until they get a court order," Baillie said.
A court hearing is scheduled for Wednesday afternoon.
According to the petition, HEI's largest creditors include Boulder Investors of El Segundo, Calif. ($443,574); Watson Marlow Inc. of Pittsburgh ($329,410); Insulectro of Phoenix (188,129); and Aerotek Inc. of Chicago ($147,011).
Minnesota firms owed money include Teamvantage Molding LLC, Forest Lake ($87,751); Digi-Key Corp. ,Thief River Falls ($73,109); AVX Corp., Minneapolis ($52,886); Medtronic Inc., Fridley ($39,782), and Cresa Partners, Minneapolis ($36,125).