Olevia-branded LCD TV supplier Syntax-Brillian this month issued a voluntary petition to enter Chapter 11 reorganization, excluding in the process its Vivitar digital camera business, which it is seeking to sell off.
The company said last 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 TV supplier.
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. The transaction is expected to close by Aug. 31, according to Syntax-Brillian.
At the same time, the company said it is looking to sell off its Vivitar camera business, which it originally acquired in 2006 for approximately $26 million — in part to help the company find distribution for LCD TVs through Vivitar's international retail accounts.
Syntax–Brillian also revealed 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 provide working capital and financial resources to fund the transition.
In court, Syntax-Brillian said it won its first-day motions, receiving approval to continue wage and salary payments, honor existing employee benefits and continue certain customer programs.
The company also said it obtained DIP financing from Silver Point Finance, and received court approval to access it on an interim basis.
"We are pleased the court has approved these first-day motions which represent a significant step forward in the Chapter 11 process," said Gregory F. Rayburn, Syntax-Brillian's interim CEO. "These approvals will allow us to continue business operations as normal while we complete our sale to Olevia International Group, ultimately resulting in a much stronger company that is better positioned to reach its full potential."
Rayburn said Syntax-Brillian's management and board of directors arrived at the decision to seek bankruptcy protection 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 consumer, 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 executive 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."
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/CEO, replacing him with Rayburn as the interim CEO.
Syntax-Brillian said that due to its Chapter 11 petition, it expects its common stock to be de-listed from the Nasdaq Global Market, and that "shares of its common stock will have no value as a result of the reorganization and subsequent transaction."