ninohernes Posted April 14, 2003 Report Share Posted April 14, 2003 This is from stereophile magazine online (www.stereophile.com)Bankruptcy Announced By Jon Iverson April 14, 2003 — On April 8, Recoton Corporation voluntarily revealed that it and all of its US-based subsidiaries filed for bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York under Chapter 11 of the United States Bankruptcy Code.The company reports that "debtor-in-possession" (DIP) financing for the bankruptcy proceedings has been arranged with Recoton's existing lenders, which include Heller Financial and General Electric Capital Corporation. Upon approval, Recoton reports, the DIP financing will provide immediate funding to support the company's ongoing business requirements.Founded in 1936, Recoton develops, manufactures, and markets several brands of home and mobile audio products, video and computer game accessories, and other consumer electronic accessories. The company claims it offers more than 3000 products, including those by such brands as Advent, Ambico, Acoustic Research, Discwasher, InterAct, Jensen, Linear Research, Recoton, Road Gear, Spikemaster, and Sprint.In December 2002, Recoton sold its interest in its AAMP subsidiary to an affiliate of ICV Capital Partners, and dealt audiophile favorite NHT to Rockford Corporation for total said to amount to $35 million.Recoton had announced in 2002 that it would implement and substantially complete restructuring of operations to reduce overall debt structure, enhance cash flows, and restore the company to profitability. This plan clearly fell short of expectations, prompting the company's Robert L. Borchardt to observe that the voluntary action was initiated "to protect the value and viability of Recoton's operations and ensure that our customers receive necessary products, services, and support while we seek to sell Recoton's assets as a going concern."The company specifies that terms of the DIP financing require Recoton to sell its remaining businesses and all related assets and apply the proceeds from such sales to reduce Recoton's outstanding indebtedness. These sales, which are subject to the approval of the bankruptcy court, are expected to be consummated by June 30, 2003.Recoton has retained Stroock & Stroock & Lavan as its bankruptcy counsel and Kroll Zolfo Cooper as its financial advisor. Recoton has also retained Jefferies & Company as its investment banker to market Recoton's assets, and that company has received "several expressions of interest" from potential bidders. Link to comment Share on other sites More sharing options...
Guest Bret Posted April 15, 2003 Report Share Posted April 15, 2003 >Recoton has also retained Jefferies & Company as its investment banker to market Recoton's assets, and that company has received "several expressions of interest" from potential bidders.<Hey, let's get-together and express an interest in the AR brand.Can't believe they sold-off NHT.Bret Link to comment Share on other sites More sharing options...
ninohernes Posted April 15, 2003 Author Report Share Posted April 15, 2003 Yeah, got a few million hanging around. Link to comment Share on other sites More sharing options...
Guest Brian_D Posted April 15, 2003 Report Share Posted April 15, 2003 And to ROCKFORD! Good greif. Link to comment Share on other sites More sharing options...
Guest Bret Posted April 16, 2003 Report Share Posted April 16, 2003 >Yeah, got a few million hanging around. <Ah, but there's the beauty of the thing - You never, ever, ever use your own money, ever.Bret Link to comment Share on other sites More sharing options...
kkantor Posted April 16, 2003 Report Share Posted April 16, 2003 Interesting. I'm curious why you say this? Seemed logical to me, observing from the outside.>>Can't believe they sold-off NHT.>>Bret Link to comment Share on other sites More sharing options...
Guest Bret Posted April 17, 2003 Report Share Posted April 17, 2003 >Interesting. I'm curious why you say this? <Because they had acquired so many good brand-names it makes little sense to me to sell-off what I'll bet was one of the few (the only?) profitable line for them.But I haven't looked at the books. Maybe it made sense and I just don't see it.If I'd been trying to raise cash I think I might have sold-off Jensen or Advent. Either of those brands have more street-appeal than the rest of the others put-together.Or used to. You know I'm getting old.Bret Link to comment Share on other sites More sharing options...
kkantor Posted April 17, 2003 Report Share Posted April 17, 2003 OK, I understand your point. I'm sure it was/is a complex issue, having to do with what offers were on the table, distribution synergies, what restructuring plans there are, etc. But I gather from the news reports that the sale was lucrative, and there aren't many buyers around these days who will put up that kind of cash. So it didn't surprise me. Hey, getting old is a GOOD thing. Too many people have stopped. Link to comment Share on other sites More sharing options...
tysontom Posted April 17, 2003 Report Share Posted April 17, 2003 >>But I haven't looked at the books. Maybe it made sense and I>just don't see it.>>If I'd been trying to raise cash I think I might have sold-off>Jensen or Advent. Either of those brands have more>street-appeal than the rest of the others put-together.>>Or used to. You know I'm getting old.>>BretBret,I think there has been a gradual sell-off of several Recoton assets in order to generate operating capital. It apparently hasn't been enough. I think the sell-NHT strategy was probably good -- $35M for a viable product line makes sense -- and Rockford probably could see a lot of value in NHT (more than just the brand name). Rockford certainly seems to know what their doing as well, especially in the car-audio business.Now, as I understand it, Recoton is compelled to sell off most everything, which would include AR and other product lines, in order to generate enough capital to take care of debts, but I don't completely understand the process in this case.--Tom Tyson Link to comment Share on other sites More sharing options...
tysontom Posted April 17, 2003 Report Share Posted April 17, 2003 I'm sorry. I should have made that a "text" file, rather than HTML. There is an abundance of gibberish on the beginning and ending, but the text in between has the details.--Tom Tyson Link to comment Share on other sites More sharing options...
Guest Bret Posted April 18, 2003 Report Share Posted April 18, 2003 >the text in between has the details<That's what I understood to be happening. Looks like Recoton will be gone by mid-year.I hope, wish, pray that someone who loves AR for what it was (and more importantly what it stood for) will buy it and restore the respectability of the brand. I doubt they'll make speakers I love, but who knows?BretPS - Tom, speaking of praying; I think my guardian angel was whispering in your ear about holding old AR parts. As you may remember I've been having a devil of a time making my 9's image correctly. The tweeters just sounded different to me. Guess what restored them to "like new" listenability? I don't have to cock my head like a dog listening to a dog whistle to get an image out of them anymore. I didn't think I could hear up there all that well. Evidently I can. Link to comment Share on other sites More sharing options...
kkantor Posted April 18, 2003 Report Share Posted April 18, 2003 I think it is best for me to recuse on this topic. But, don't worry about the AR brand going away, it is a strong name. Consider this to be like hitting the "RESET" button. Link to comment Share on other sites More sharing options...
Guest Bret Posted April 18, 2003 Report Share Posted April 18, 2003 >I think it is best for me to recuse on this topic.<Does that mean that we would like to know something you know if only you could tell, but can't? :-) Reset, huh? Hmmmmmmm.Chapter 11 usually means the company is going to try to "re-emerge" and contiue as a going concern on the other side. (like Worldcom going back to MCI) I have my doubts if they've been ordered to sell-off their brands, though. That's what I think I've been reading. Thought it was interesting that they thought there *would* be money to repay unsecured creditors.Bret Link to comment Share on other sites More sharing options...
cruisaire Posted April 18, 2003 Report Share Posted April 18, 2003 Unfortunately for companies such as this (but fortunately for me), I am in the business of assessing environmental concerns when these "situations" occur. I evaluate and advise on conditions as they relate to current laws and the environmental liabilities associated with both "economically healthy" and "economically unhealthy" firms. I think it safe to say that greater than 80% of the "deals" I am involved with produce (in the end) much stronger companies and more stability for the product line, the employee, and the economy as a whole. Bear in mind, this is big picture thinking and doesn't focus on the immediate but the longer (5+ years)term. Link to comment Share on other sites More sharing options...
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