New York - Thomson has raised the ante for Recoton's consumer electronics business, outbidding front runner Gemini Industries.
'At an auction held last Thursday, the management of Recoton selected the bid of Thomson as the highest and best offer for the purchase of Recoton's accessories business,' said a Thomson spokeman. 'Recoton's management recommended the bid to its board meeting on Sunday June 1, and [it] was accepted.'
A meeting scheduled for June 3 at the U.S. Bankruptcy Court for the Southern District of New York, here, will decide the ultimate fate of the sale to Thomson, the Paris-based CE maker known for its RCA brand.
Gemini, in April, announced it had reached agreement with Recoton to pay $50 million in cash for all of the assets of the bankrupt company's CE accessories business.
Recoton had filed for Chapter 11 protection earlier in April, with the stipulation it had to auction off its business properties and all related assets.
The proposed transaction includes accessories under the Recoton, Jensen, Acoustic Research, Advent, Discwasher and Ambico brands. It does not take in the Jensen, Acoustic Research and Advent audio products.
Thomson, which already has significant product representation in the CE accessories category, includes in its lineup universal remote control devices, audio cables and connectors, cordless phone batteries, headphones, antennas, wireless home networking and speaker products, DBS and camcorder accessories, surge suppressors, computer accessories and even furniture. Many of these products feature the RCA brand.
Amid rumors about which consumer electronics company might step up to make a bid for all or part of bankrupt Recoton, Gemini initially was the only player to answer this call.
Gemini had paid Recoton a $2 million deposit for the right to bid. Any further qualified bidders, such as Thomson, also had to pay this amount.
To submit an acceptable bid that did not piggyback on Gemini's due diligence effort, a qualified alternative buyer such as Thomson had to top Gemini's offer by more than $3 million, including at least the amount of a $1.5 million termination fee, expense reimbursement and an additional $1.5 million.
Recoton will use proceeds from the sale to reduce outstanding debt, which totaled about $235 million in long-term obligations last year.
Recoton, which noted assets of $223.6 million and liabilities of $234.6 million in its bankruptcy filing, only retained its CE accessories and audio businesses after sale of its computer and video gaming products segment at the end of 2002 and earlier this year.
Separately, the status of Recoton's home and car audio assets may also be decided upon on at the bankruptcy court hearing tomorrow. Industry sources say that Recoton's board has considered a bid by Audiovox for the audio business.