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PSC Agrees to Littlejohn Buyout
November 23, 2002

Jonathan Berke, The Daily Deal. -- The maker of bar-code scanners will file for Chapter 11 as part of a plan to be taken private by the Greenwich, CT-based private equity firm. Bar-code scanner maker PSC Inc. on Friday, Nov. 22, abandoned a two-year effort to restructure and said it was filing for bankruptcy as part of a plan that calls for Greenwich, CT, buyout firm Littlejohn & Co. to take the company private.

Having negotiated a couple of extensions with its bankers, PSC's credit facilities were going to mature Nov. 15. Instead of pursuing additional extensions, PSC cut the deal with Littlejohn, which will buy all $124 million of the Portland, Ore.-based company's senior and subordinated debt and provide $20 million of debtor-in-possession financing for the company. By filing for Chapter 11 protection in the U.S. Bankruptcy for the Southern District of New York in Manhattan, PSC will enable Littlejohn to convert a portion of the debt it's buying into a significant equity stake in a going-private transaction.

PSC announced efforts to restructure in November 2000, resulting in the sale of assets, a new management team and the relocation of the company's headquarters to Portland from Webster, N.Y. PSC's need for cash became readily apparent in September, when it hired U.S. Bancorp Piper Jaffray to attract new capital, according to Securities and Exchange Commission documents.

"Very quickly, we became a company that was sound operationally, but we could not afford our capital structure," said CEO Ed Borey.

After contacting many private equity firms, PSC began talks with Littlejohn last summer, according to Borey. With Littlejohn's capital infusion, PSC will make its trade creditors whole on all $20 million of their claims.

In addition, PSC management will remain intact. For Littlejohn, a private equity firm founded by former Joseph Littlejohn & Levy pioneer Angus Littlejohn, the PSC deal is typical of the kind of transactions it seeks involving middle-market manufacturers with revenues of $200 million to $800 million.

"This transaction is emblematic of our investment strategy and, after strengthening the company's balance sheet, we will work closely with PSC's experienced management team to pursue exciting growth opportunities," said Littlejohn President Michael Klein in a statement.

Advising PSC on its restructuring were Dave Dandell and Steve Sessinger from the Los Angeles offices of Piper Jaffray. PSC hired James M. Peck of Schulte Roth & Zabel LLP as legal counsel. Littlejohn was represented by the New York firm of Morrison Cohen Singer & Weinstein. The case is being heard before Judge Stuart Bernstein.

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