Dow Jones News Service -- February 19, 1997
Diana Corp. Says Has 'Material Liquidity Deficiency'
WASHINGTON (Dow Jones)--Diana Corp. (DNA) has consumed more than $1.8 million in
cash in the last six weeks, leading the provider of telecommunications equipment to say in a
regulatory filing that it is experiencing ''a material liquidity deficiency.''
In a quarterly filing Tuesday with the Securities and Exchange Commission, Diana attributed the
problem to a revenue-growth shortfall at its Sattel Communications unit, extended payment terms
extended by Sattel to its customers, and $2.2 million in cash restructuring costs. Diana said cash
on hand fell to less than $1 million at Feb. 18 from $2.8 million on Jan. 4.
Diana added that it has been ''unable to upstream cash'' from two of its units due to restrictions in
their revolving credit lines. The company said it intends to review its expenses, seek a secured
credit line with its banker, Hambrecht & Quist, try to sell a building owned by another unit and
negotiate a sale-leaseback of some Sattel fixed assets in an effort to remedy the cash squeeze.
NYSE-listed shares of Diana were halted late Wednesday afternoon after they had fallen 2 1/8 at
8 3/4 on volume of 464,500 shares.
Diana said in the SEC filing that on a longer-term basis, it will need to ''improve revenue growth in
order to generate cash from operations and maintain its liquidity.'' The company said it may
consider selling additional ''equity or other'' securities in an effort to fund working capital for capital
spending at Sattel. Diana said it may also tap bank borrowings and other capital sources for its
operating needs.
A Diana Corp. official said the company expects a $5.97 million payment from a customer by
March 28. The payment will substantially improve the company's liquidity, the director of investor
relations, Anthony Squeglia, said.
According to the 10-Q report the company filed Wednesday with the Securities and Exchange
Commission, Diana Corp. is in final negotiations over the payment.
''That's a significant part of the plan,'' to remedy the liquidity problem the company reported in its
quarterly filing, said Squeglia.
The company currently is owed $8.3 million. Its top priority is working with customers to collect
overdue payments, according to the filing.
Squeglia said the company plans to issue a statement soon elaborating on the information in the
filing.
The filing says there is no guarantee the company can take the necessary steps to improve liquidity
before its remaining cash balance is consumed. |
