Worldspace goes Chapter 11
Worldspace filed for Chapter 11 reorganisation late on Oct 16, along with its US subsidiaries and AfriSpace, the holding business for the AfriStar satellite. Worldspace stock price evaporated on Friday, falling from 67c to just 18c at close of business, and giving the business a Market Capitalisation of just $7.7m.
The news is no surprise to anyone reading Rapid TV News' regular coverage and insider stories on Worldspace which has been close to this position for some months. "The WorldSpace Board of Directors unanimously determined that Chapter 11 reorganization was necessary for the Company to engage in an orderly process to raise sufficient funds to repay its senior secured and convertible notes by means of either a sale of the Company or its assets, or a recapitalization of the Company," said the Company.
Its formal note continued: "WorldSpace will continue to operate its business and manage its assets as a "debtor-in-possession" under the jurisdiction of the court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the court. The holders of the Company's existing senior secured and convertible notes have agreed to provide, subject to the satisfaction of certain conditions, a "debtor-in-possession" financing facility of up to $13 million for a period of 90 days in order to facilitate a sale transaction. The financing facility is expected to enable the Company to continue to pay salaries of critical employees and continue operations which are critical to preserving the value of its core assets through the term of the facility."
The new $13m of financing is just the latest in yet another stop-gap measure to keep founder, president, CEO and innovator Noah Samara - perhaps - in work for a few more weeks. The company owes 50 "critical" employees $1.35m in back-pay (and we wonder how far up that list is Mr Samara. In truth, Worldspace owes a massive $1.8bn in assorted debt. More pressing debt is owed to chip-set suppliers Micronas ($18.2m) and technology developers Fraunhofer Institute for Integrated Circuits, (owed $4.4m). Samara's own company, Yenura Pte, a Singaporean entity, is Worldspace's largest unsecured creditot, owed $55m.
We'll have more on this in tomorrow's edition, but the Court filing states Samara owns 47.15% of the firm. Aletheia Research & Management owning 37% percent, and Natixis Asset Management Advisor LP, owning 5.25%, are the other major shareholders of WorldSpace.