Worldspace Directors quit

Worldspace has once again escaped the executioner’s knife for a few extra days, obtaining an extension from its May 31 date when it was due to repay $17.7m to its creditors. The broadcaster’s note holders have extended the repayment period on its bridge-loans by 30 days to June 30.
However, the news seems to have precipitated (perhaps entirely coincidentally) the departure of two directors. Dr Michael Nobel quit without giving a reason, as did Dr Frank Juergen Richter. Both resignations were “immediate”. Dr Nobel’s credentials are flawless as chairman of the Nobel Family Society, and a senior consultant to UNESCO. Dr. Richter is founder/president of Horasis-The Global Visions Community, incorporated in Geneva, Switzerland. Prior to founding Horasis, Dr. Richter was director of the World Economic Forum, in charge of Asian affairs.

Noah Samara, Worldspace’s founder, Chairman and CEO, is not called “Houdini” for nothing, and this latest extension gives him barely four fresh weeks of wriggle room in an attempt to – again – escape financial meltdown. Samara, late on Wednesday, said the cash needs at Worldspace were “challenging”.

The official statement said: “Under the terms of the agreement, the note holders have agreed to defer until June 30, 2008 the Company’s obligation to pay $17.7m in principal amount of the Bridge Loan Notes plus accrued but unpaid interest due on the Bridge Loan Notes and Convertible Notes, and to forbear exercising their rights and remedies with respect to the payment default.

“This agreement gives the Company time to bring in the funds already committed to it and to raise new funding. While the agreement accelerates payment of the remaining outstanding amount of the Bridge Loan Notes and the Convertible Notes, such accelerated pay down of the Notes this year will remove capital structure restrictions, which would have otherwise remained until June 2010. Our cash needs are challenging, but we are working very hard to address this in order to take full advantage of the milestones we have achieved in Europe, including licenses from Germany and Switzerland, and successful on-the-ground testing of our service in Italy, where we expect to launch Europe’s first satellite radio service as early as 2009.”

The fresh agreement between Worldspace and its note holders requires the principal amount and any interest to be paid in full by July 31.

As we hinted in our article in yesterday’s issue, Worldspace is down to the wire in terms of its available cash. It must put new funds in place, not just to stay afloat itself but also in the shape of fresh funding to build out and exploit the licenses it has won in Italy and Germany.

The market took the news in a positive fashion, marking Worldspace’s stock up from $1.58 to $1.69 in later trading.