Shares of Costa Mesa’s Irvine Sensors Corp., a small maker of electronics for the military, rose Monday after the company said it’s working out a plan with lenders to pay down debt.
The move likely is designed to avoid a potential bankruptcy filing.
Investors sent the stock up nearly 4% on a recent market value of about $4 million.
Irvine Sensors is set to sell a subsidiary, Richardson, Texas-based Optex Systems Inc., for a minimum of $15 million to pay back its two biggest lenders.
After the sale, Irvine Sensors projects having roughly $4 million in debt left.
The $4 million is set to be converted into stock owned by the lenders.
The plan, known as a “workout,” likely was cheered by investors who would have seen their stakes wiped out in a bankruptcy filing.
The Optex Systems subsidiary was considered a bright spot for Irvine Sensors, which has been struggling to get out of red ink for more than a year.
The company first bought a 70% stake in Optex Systems for $14 million in 2005.
A year later it spent about $18 million to buy the rest of the company, which makes sighting systems that are used in most military land vehicles.
Irvine Sensors is best known for making stacks of memory chips, miniature cameras and night-vision goggles.
Its shares are off about 90% in the past 12 months.
Last week the company said it got back into compliance with the Nasdaq requirements to continue trading on the exchange.
It had to trade at a minimum of $1 per share for 10 days in a row.
