Thornton, Colo. — A bankruptcy court judge has approved Ultimate Electronics’ CEO Mark Wattles’ $47 million bid on 32 of the company’s 62 stores, giving the A/V specialty retailer a new lease on life.
The remaining stores, which Ultimate has previously earmarked for closure, will be sold to a liquidation consortium.
Both deals are expected to close today.
Wattles submitted the winning bid — $43.7 million in cash and a $3.5 million promissory note — in a going concern auction that will save the chain and about 1,000 jobs, while erasing most of its debt. Wattles will still owe lenders, lead by Wells Fargo, about $11 million in bankruptcy financing and fees, and will also assume about $2 million in leases and contracts. He will also lease back the company’s corporate headquarters, a distribution center and flagship store — the only real estate owned by Ultimate Electronics — for $1.5 million a year.
Wattles’ bid, which he is financing with his own resources, reportedly exceeded competing offers by as much as $5 million. Potential bidders included Best Buy, Circuit City and CompUSA. Wattles, the founder and former chairman/CEO of Hollywood Video, recently sold his remaining shares in the video rental chain for about $53 million.
The liquidation group, which includes SB Capital, Tiger Capital and Gordon Brothers, will pay 77.9 cents on the dollar for the assets of the 30 stores.