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Zenith Warns Of Red Ink Losses Lead To Restructuring

Glenview, Ill. -- Zenith Electronics Corp., formerlya key cable set-top supplier that has chosen lately to focus on digital boxes, warnedinvestors Wednesday that its financial problems have forced a restructuring plan thatcould lead to bankruptcy.

As part of a plan to restructure outstanding debt andcredit agreements, Zenith may seek "out-of-court and in-court financialrestructurings" that would likely lead to "massive dilution" ofZenith's common stock, the company said. The share price was down $2.06, or 31percent, to $4.56 at Wednesday's close.

Zenith also reported a $155.7 million loss in the fourthquarter, or $2.32 per share, compared with a $69.3 million loss ($1.05 per share) in thesame period in 1996. Sales fell 19 percent, to $348 million from $428 million, in theperiod. The company blamed a general softness in color TV sales and start-up problems at arenovated picture-tube plant.

LG Electronics Inc., Zenith's majority shareholder,has agreed to provide a secured credit facility for up to $45 million through June 30. AndLG is considering longer term financial support, Zenith said. Zenith said it needs atleast $225 million to get through the year.

In January, Zenith said it planned to discontinue itsanalog converter line after 15 years in the business. Digital set-top customers includethe Americast consortium.