New York – Gemini Industries has agreed to pay $50 million in cash to Recoton for all of the assets of the bankrupt company’ consumer electronics accessories business.
This amount, a number reached by Gemini and Recoton under terms of a mutual Asset Purchase Agreement, has been filed with the U.S. Bankruptcy Court for the Southern District of New York here. The purchase price is subject to adjustment.
Gemini, last week, announced it had reached agreement with Recoton to acquire the accessories portion of Recoton’s operation. Recoton had filed for Chapter 11 protection earlier in the month, and must auction off its business properties and all related assets.
Gemini also has entered into discussion with Robert Borchardt, Recoton’s chairman/CEO, regarding the possibility of Borchardt becoming an officer or consultant to Gemini, according to the filing. These discussions, so far, have been labeled ‘preliminary in nature and content,’ in the court documents.
As a result of this discussion, Borchardt has not been involved in any way in negotiations between Gemini and Recoton, concerning the Asset Purchase Agreement, the documents stated.
Gemini, which might end up the only bidder for Recoton’s accessories business, could also receive some purchase competition, since Recoton will consider higher and better offers from other companies that qualify under the Asset Purchase Agreement. All additional bids must be submitted no later than May 16.
Gemini already has paid Recoton a $2 million deposit for the right to bid. Any further qualified bidders also will have to pay this amount.
To submit an acceptable bid that does not piggyback on Gemini’s due diligence effort, a qualified alternative buyer would have 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. The auction is scheduled for May 20.
Recoton, which noted assets of $223.6 million and liabilities of $234.6 million in its bankruptcy filing, said it currently employs 350 people, with only its CE accessories and audio businesses remaining after sale of its computer and video gaming products segment at the end of 2002 and earlier this year.
According to the court documents, Gemini is not obligated to hire any of Recoton’s employees, and may make offers of employment as it chooses. Gemini has expressed primary interest in Recoton’s sales and marketing staff.