MPC isn't saying why stock trading was halted

Bad news keeps coming from Nampa's troubled MPC Corp., raising fresh questions about the computer maker's future that MPC won't answer.

A stock exchange halted trading this week in MPC's stock, trading at a mere 4 cents a share. The company filed reports with federal securities regulators indicating that Wells Fargo Bank has taken steps to assure MPC can repay money it owes Wells Fargo. A finance professor at Northwest Nazarene University who reviewed MPC's latest financial statements said the company's liabilities exceed its assets.

This news follows MPC's announcement last week that it had laid off 200 workers at its plants in Nampa and North Sioux City, S.D.

"It's obvious they are cash-strapped," said Peter Crabb, associate professor of finance and economics at NNU. "They have lost nearly $100 million in net income. In the second quarter of this year, they burned through $22 million in cash."

MPC, founded in 1991, was a unit of Micron Electronics before being sold in 2001. It sells computer products and services to small and medium businesses, government and educational institutions.

NYSE Alternext US, formerly the American Stock Exchange, stopped trading MPC stock on Tuesday pending a release of unspecified news from the company, exchange spokesman Scott Peterson said.

By week's end, it was unclear what that news might be. MPC did not return telephone calls.

The stock price has fallen fairly steadily since it traded at about $8 in August 2005.

Meanwhile, the company has filed two reports with the Securities and Exchange Commission showing that it has renegotiated a complicated financing agreement with Wells Fargo Bank.

The agreement involves "factoring," which allows the bank to buy MPC's accounts receivable and then collect the money. Factoring works well for companies, Crabb said, unless they need a lot of cash.

Wells Fargo is also requiring MPC to increase a collateral cash account from $3.5 million to $6.6 million. That could indicate uncertainty about the company's future, said Bill Russell, a professor of business law and associate dean at NNU.

"It appears from the filings that Wells Fargo is taking steps to obtain more security for their loans to MPC," Russell said. "That indicates they are uncomfortable with their level of security."

Wells Fargo Bank declined to comment, citing client confidentiality.

MPC has had negative equity for nearly two years, meaning its liabilities exceed its assets, Crabb said.

"Theoretically that's bankrupt," Crabb said, "though they haven't filed with a court to protect them."

Crabb said a company can operate even when it is insolvent, or unable to pay all its bills. He points to the nation's airlines as an example.

There are more signs of trouble. Two suppliers have sued MPC, alleging that it failed to pay for parts. LSI Corp. of Pennsylvania claims MPC is refusing to pay $348,673 that is past due. Prism Pointe Technologies of Mississippi says MPC owes it $732,287.

Just a year ago, MPC was promising better times ahead. In October 2007, MPC acquired Gateway Computers' business-computer unit and announced plans to hire an additional 100 workers in Nampa.

Last year, the company sent 153 jobs from a plant in Nashville, Tenn. - which it obtained in the Gateway deal - to a plant in Juarez, Mexico.

There's been some good news lately. Two weeks ago, the company said it had received nearly $28 million in orders from the U.S. government, including $13 million from the Department of Homeland Security and $14.9 million from the Department of Defense.

In its latest quarterly report filed Aug. 14, MPC reported a net loss of $12.5 million for the quarter ending June 30, compared with a loss of $25.3 million for the same period in 2007. Revenue was $125.4 million, up $71.8 million over the same period the previous year. The revenue increase followed the Gateway acquisition.

Kathleen Kreller: 377-6418