Anixter International Inc., a network equipment distributor which suffered bad debt losses due to the Nortel bankruptcy, is borrowing $180 billion at a high interest rate to pay down current debts.

Chicago-based Anixter, whose offerings include cables, switches, PBXs and test equipment, said today it has sold $200 million worth of senior discount notes, which has given the company $180 million in cash. Senior discount notes are, in effect, loans which are not secured by the company and which, like bonds, investors may sell to each other.

All figures are in U.S. currency. The yield works out to 12 per cent, the vendor said, and it has to pay off the debt in 2014.

The company is still profitable but barely breaking even. During the quarter ending Jan. 9, Anixter made $9 million on revenues of US$1.59 billion, down from net earnings of $61.7 million on revenues of $1.6 billion during the previous quarter. It took a charge of $24 million during the latest quarter due to bad debt attributed to the bankruptcy of NetVersant Solutions Inc. and Toronto-based Nortel.

Anixter has $65 million in cash as of Jan. 2, and its debt included $167.5 million in “zero coupon convertible notes.” Although they are due in 2033, holders have the option of selling them to the company July 7, according to Anixter’s most recent annual report.

In a press release, Anixter’s executive vice-president of finance, Dennis Letham, stated today’s note sale “extends the average maturities of our borrowings and provides the company with enhanced liquidity to meet these uncertain economic times.

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