Tempe, Ariz.— Olevia-branded LCD TV supplier Syntax-Brillian said it has issued a voluntary petition to enter Chapter 11 reorganization, and has excluded its Vivitar digital camera business, which it is seeking to sell off.
The company said Monday it is seeking bankruptcy protection as it attempts to sell certain assets to a newly-created company, Olevia International Group, which is under common ownership with TCV Group, a key OEM resource for the company.
TCV Group supplies Syntax-Brillian with mechanical design services and plastic injection molded parts for Olevia brand LCD TVs.
Under the terms of the transaction, Olevia International Group will assume $60 million of Syntax-Brillian’s secured debt.
Syntax-Brillian said it filed a motion with the U.S. Bankruptcy Court for the District of Delaware, seeking approval for the sale. The proposed sale is subject to higher and better offers, bankruptcy court approval and other customary conditions, according to a company statement. A closing of transaction is expected by Aug. 31, according to Syntax-Brillian.
In a statement disclosing the decision interim chief executive officer Gregory F. Rayburn said Syntax-Brillian’s management and board of directors arrived at the decision in consultation with outside legal and financial advisors. He said “the Chapter 11 process, represents the best long-term solution for our retail partners, suppliers, employees and consumers,” and “will allow us to operate business as usual, even as we address liquidity and leverage issues experienced in the past year.”
“It will allow us to honor our commitments to our retail partners, suppliers, employees and consumers, continue to advance initiatives that improve and develop our product lines, and better position us to capitalize on the demand for our products going forward,” Rayburn said.
“We believe the proposed transaction would enable us to stabilize our business and execute on our growth prospects,” he continued. “Moreover, we believe the purchaser would gain a competitive advantage by being the first in the LCD TV industry to unite design, sourcing, manufacturing and delivery of HDTV products under common ownership.”
Meanwhile, Syntax–Brillian also said it has appointed KPMG Corporate Finance to assist in the sale process of Vivitar, which continues to conduct business as usual, Syntax-Brillian said. The company said it is currently negotiating with lenders to secure DIP financing to raise the necessary financial resources to fund the transition.
Syntax-Brillian originally acquired Vivitar in 2006 for approximately $26 million, in part, to help the company find distribution for LCD TVs through Vivitar’s international retail accounts.
The company also announced the resignations of a number of directors including: Vincent F. Sollitto, Jr.; James Ching Hua Li, Bruce Berkoff, David Chavoustie; Yasushi Chikagami; and Max Fang. Michael Garnreiter remains as the sole member of the board of directors.
On July 2, the board terminated James Ching Hua Li as president and CEO, replacing him with Rayburn as the interim CEO.
Syntax-Brillian also said that due to its Chapter 11 petition it expects that its common stock will be delisted from the Nasdaq Global Market within the next 10 days.
“Syntax-Brillian expects that shares of its common stock will have no value as a result of the reorganization and subsequent transaction,” the company said.