SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549-1004
______________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15 (d) of the Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported):
December
8, 2006
Porta
Systems Corp.
(Exact
name of registrant as specified in its charter)
Commission
File Number: 1-8191
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Delaware
(State
or other jurisdiction of
incorporation
or organization)
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11-2203988
(IRS
Employer Identification No.)
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6851
Jericho Turnpike, Syosset, New York
(Address
of principal executive offices)
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11791
(Zip
Code)
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516-364-9300
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
1.01 Entry
into a Material Definitive Agreement
On
December 8, 2006, effective December 1, 2006, the Company entered into an
agreement with SHF IX, LLC, which amended its Amended and Restated Loan and
Security Agreement, dated as of November 28, 1994, as amended, to extend
the maturity of the Company’s senior debt to January 16, 2007 (the “Initial
Termination Date”), subject to the Company’s reaching an agreement with the
senior debt holder, and may be extended to February 28, 2007 (the “Extended
Termination Date”) to allow time to complete the restructuring.
The
agreement provides for payments to the senior debt holder of $112,500 on
December 29, 2006, $75,000 on January 16, 2007, $75,000 on January 31, 2007
and
$150,000 on February 28, 2007. The Amendment also provides for the Company
to
pay the legal expenses and certain other expenses of the senior debt holder.
As
part of the extension, the senior debt holder agreed to continue the current
deferral of interest through December 31, 2006 on most of the senior debt.
For
the period of the extension commencing January 1, 2007 through the applicable
termination date hereunder (either the Initial Termination Date or the Extended
Termination Date) interest shall accrue at the rate provided in the Amended
and
Restated Loan and Security Agreement and shall be payable in the manner stated
above.
As
a
condition to the extension, the senior debt holder and the Company have agreed
to discuss a restructuring of the Borrower’s obligations and to reach an
agreement on such restructuring by January 16, 2007 with the restructuring
to be
completed by February
28, 2007. If the Company does not reach an agreement with the senior debt holder
by January 16, 2006 or otherwise fails to achieve the milestones, the senior
debt holder has the right to immediately accelerate the maturity
date.
As
previously announced, the Company has retained an investment banker and has
actively pursued an investor. Company cannot give any assurance that it will
be
able to obtain an investor on terms that are acceptable to the senior debt
holder or otherwise reach an agreement with the senior debt holder regarding
a
restructuring of the senior debt. In the event that the Company is successful
in
negotiating an agreement with an investor and the senior debt holder, it is
likely that the Company will be required to issue a significant number of shares
of common stock or convertible securities which would result in very significant
dilution to the Company’s present stockholders. However, the Company cannot give
any assurance that any such restructuring will be consummated outside of
bankruptcy reorganization.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned, hereunto
duly authorized.
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Porta Systems Corp. |
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| Date: December
11,
2006 |
By: |
/s/Edward
B.
Kornfeld |
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Edward B. Kornfeld |
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Chief Executive Officer |
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Chief Financial
Officer |