Redwood City Ð In a deal closed on October 7, NeXT's long-term debt to Canon will be reduced in exchange for Canon's increased ownership in NeXT and the rights to all NeXT hardware technology. Powerhouse, a start-up company with ties to Canon, has acquired the technology and hired several former NeXT hardware-engineering employees.
"The debt was sizable. It is important as a milestone for NeXT to have closed the deal so we can move forward. The restructuring is behind us," said NeXT CFO Dominique Trempont.
According to Trempont, Canon acquired the rights to all NeXT hardware designs, hardware-design software, and related equipment. Over a period of time, there will be some conversion of debt into equity in NeXT as well, but it will only slightly dilute the equity of current investors, Trempont said.
Exact figures of the transactions were not disclosed by either NeXT or Canon, but some portion of the long-term debt will remain on NeXT's balance sheet. As part of the deal, Canon also acquired exclusive distribution rights for NEXTSTEP software in seven Asian countries.
NeXT arranged a $55-million credit line from Canon in June 1992. According to sources, a substantial amount of the line was drawn down and converted into a debt to Canon.
Originally designed to see NeXT through its public offering, the money became a significant debit on NeXT's balance sheet, impairing NeXT's ability to find additional financing. Further, sources claimed that the money came with severe constraints and performance requirements from Canon, which NeXT failed to meet.
Steve Jobs extended a personal $10-million credit line at the same time Canon did. NeXT would not comment on whether it drew from this line or how debt from it is being handled.
Powerhouse has been operating as a separate entity for several months in NeXT office space under the direction of Jon Rubinstein, former NeXT vice-president of hardware. It will move to an undisclosed location outside of NeXT's facility in December, according to Trempont. Rubinstein declined to discuss Powerhouse.