Amt Corp Summary

CASE SUMMARY

CASE TITLE _Advanced Medical Technology Corporation

(1) BACKGROUND:

AMT is a company that manufactures, develops, and sells scientific medical instruments, needles, and catheters. These products represent an alternative to traditional surgical procedures, allowed analysis of corrective treatment with less trauma and risk, and sold at a lower cost. AMT has had extraordinary growth with large spending on research and development and quick expansion of their sales force. AMT management meets many financing issues by relying on short-term credit. AMT usually has a sales volume that is larger than capital. AMT leases some of their manufacturing facilities and has established a connection with Biological Labs, Inc. On the day of closing the deal with BL, AMT received a payment of $7 million in exchange for five percent of their outstanding stock and the right to purchase an addition 13% of outstanding stock over a five-year period, which ends in June 1988, for $12 million. AMT has taken out a loan through Sunnyvale Bank with a credit line of $6 million and using accounts receivable and inventory pledged as their security. Another bank, Bank of San Francisco believes that AMT just does not have enough quality of assets to extend any more credit to them.

(2) MAJOR PROBLEM(S):

AMT is having a problem financing their business operation and is having a problem trying to find another bank that will extend them a longer line of credit because of their insufficient assets. AMT needs to start using long term debt to finance their operations and would need more than the $8 million dollar loan that they are asking for they will need to borrow more around $12 million to finance their rapid growth in sales.

(3) ALTERNATIVE COURSES OF ACTION:

AMT needs to work on improving their accounts receivable and their short-term debt. Improving their accounts receivables can be done by doing credit checks on all customers before approving them.

(4) BRIEF ANALYSIS OF...