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Judge OKs Versa Takeover of InPhonic
12.14.07, 1:45 PM ET
PHILADELPHIA - Philadelphia's Versa Capital Management won court approval to take over InPhonic Inc., after reaching a deal with creditors of the Web-based retailer of wireless devices and services.
Judge Kevin Gross approved the deal at a hearing Thursday in the U.S. Bankruptcy Court in Wilmington, Del. In a prepared statement, Versa officials said they believe the business "holds great promise."
The Washington, D.C. company filed for Chapter 11 protection Nov. 8, shortly after Versa positioned itself for the takeover by acquiring $90 million worth of top-level bank debt at a steep discount.
Unsecured creditors opposed Versa's bid to acquire InPhonic (nasdaq: INPC - news - people ), arguing they were getting nothing out of the deal, and therefore, Chapter 11 bankruptcy was not an appropriate forum.
To win creditors over, Versa agreed to help fund wind-down costs, including investigations that could lead to a recovery for the vendors InPhonic is leaving unpaid.
"Versa is making certain funding available so we can get this case resolved in Chapter 11 through a plan," said Claudia Springer of the law firm of Reed Smith, attorney for the official committee of unsecured creditors.
Some creditors will be made whole thanks to the takeover, because the buyers have to make good on old debts owed to vendors whose contracts they want to continue in the revived InPhonic.
"We think this was a good settlement, based on the type of case that it is," Springer, commenting on the urgent need to get the company into new hands if the business is to be preserved.
InPhonic's plunge into bankruptcy followed admissions of flawed accounting and tainted financial reports filed with the Securities and Exchange Commission for 2006.
InPhonic Gets OK to Borrow $2.3M
Associated Press 12.12.07, 12:44 PM ET
WILMINGTON, Del. - Web-based wireless seller InPhonic Inc. has won court approval to borrow $2.3 million in bankruptcy financing from a private-equity firm that is seeking to buy the company.
Judge Kevin Gross approved the financing at a hearing Tuesday, but warned creditors, the company and private-equity firm Versa Capital Management that they "are running very serious risks." The Washington, D.C.-based company, lawyers say, is losing more than $3 million a week, and the interim loan is only enough to cover this week's payroll.
Gross said if the parties don't reach an accord by Thursday, InPhonic (nasdaq: INPC - news - people )'s Chapter 11 bankruptcy could be converted to a shoestring Chapter 7 liquidation proceeding.
InPhonic filed for Chapter 11 protection last month.
No other bidders have stepped forward to top Versa's offer, which consists of canceling debt, rather than coming up with new cash for creditors.
InPhonic attorney Thomas Califano said Versa is the only entity that has offered aid to keep the company running. The company, he said, has had no offer of help from creditor "committee members like Yahoo (nasdaq: YHOO - news - people ) and Google (nasdaq: GOOG - news - people ) who have more money in the cushions of their couch than would be required" to keep InPhonic alive.
Creditors say it's time for InPhonic to cut its losses and that, since there's no hope for a reorganization, Versa should be forced to exercise its remedies as secured lender to foreclose on the company outside of Chapter 11.
Versa entered the picture shortly before InPhonic's bankruptcy filing, by acquiring about $90 million worth of secured bank debt. It's offering to exchange most of that debt to buy InPhonic in bankruptcy.
According to Versa, unsecured creditors could still get something out of the case. It says it will leave creditors with about $300,000 to try to pursue lawsuits against InPhonic's former leaders, who admitted earlier this year that accounting errors would require restatement of 2006 financial results.
The Chapter 11 filing means creditors would be entitled to the first payout from lawsuits against InPhonic's officers and directors. InPhonic carries about $35 million in insurance for misdeeds by officers and directors, Califano said.
A court-approved Chapter 11 sale offers a neater solution and other advantages to the buyer, when compared with a foreclosure outside bankruptcy. Bankruptcy sales allow buyers to walk away with assets free and clear of prior claims, but a foreclosure could leave Versa battling other InPhonic creditors. Versa says it's not a predator, but a "rescue financier."
Creditors don't like the Chapter 11 sale plan, which they say would leave them with less than they would get if the case was a Chapter 7 liquidation. Versa is the only entity with something to gain from taking over InPhonic in Chapter 11 and that a takeover will only plunge InPhonic further into debt, said Claudia Z. Springer, attorney for the creditors committee.
"We don't want this hole to get any bigger than it currently is," said Springer, who is with the law firm of Reed Smith.
http://www.forbes.com/feeds/ap/2007/12/12/ap4432093.html
Goldman sachs & Co sold 5,000,000 @.02
that will be really nice.
my question is when that "some day" will be.
I wish it happens before CH11 is approved.
yota- I dont know if there a hearing but my chart shows me believe me or not that this can get to 39 cents someday. Wouldnt that be nice.
yes
I am wondering what is happening.
some kind of hearing will be held sometimes this week, right?
Getting a little interesting here.
Bankruptcy Info. link
http://www.sec.gov/investor/pubs/bankrupt.htm
Hope this helps
maybe shorts covering?
Maybe a New Bidder? so it gives CommonHolders VALUE!
At this point it sure won't take much.
LOL
Anyone got any info why this is moving up?
Dead cat bounce?
Hope it's a Bid, but not holding my breath.
Put 130,000 shares away.
Will this move.
Today i bot some.
Wannnnng....r u still in? I am thinking of reload at this level! U?? thanks
WANG - Maybe they dont want u to have any. LOL
IF stocholders don't get a piece of the pie ? ? ?
Possible. Good luck to you and everyone still in this.
who knows maybe they'll get new offer 200mil +$ ? lol
no biggy
I'm afraid on this one, there may not be a bottom.
The company has already declared that the shares will be worthless. While, IMO, that is not precisely true, it looks like the company will come out of Chapter 11 a shell. What's a NASDAQ shell worth these days?
me too, i will hold until the shares become unvalue, woooooww~~~~ cheers~~~!!!!
Bot some at .0475 today
I'll hold over night.
and see what happens.
lol
wdik
ONE WORD "TORRID" :(
They already did last Wednesday--they released that earnings projection knowing full well they were going to file Thursday.
BOUNCE may surprise -- holding -- IMHO --
they have been dumping quitely
you have answered my question in two posts shares will be wothless and if they issue new shares comon shareholder will get zilch so that is not even a 50/50 bet to ride.
notice they payed off sachs and goldmen those there cvreditors dont care itss going bk anymore that was the crunch of the deal, plus with 50 million towards there debt they gettng it for nothing
I allready sold just dont want to see other screwed like the ones that held it.
gl
looking for the dead cat bounce....
it will... just wait and see. management will punp it just enough to dump their shares... you gotta beat them before they do. if you don't, you hold the bag.
yup... it is.
considering it took a dump and forgot to flush.
People¨got screwed, see this is posted on the I box above.
"CHAPTER 11 FILED. SHAREHOLDERS DISPOSED OF. COMPANY SOLD OFF. WE GET NOTHING."
If you didnt sell yet, sell first minute Monday morning. This is going to zero soon.
Oh, this stock is crap right now. Dont believe a word of what you say.
They also said they signed a sales agreement....
"...that it has entered into an agreement to sell substantially all of its assets to an affiliate of Versa Capital Management, a Philadelphia based private equity firm."
which literally means that the shares in effect could be cancelled and new shares issued for the new company; common shareholders usually get nothing in a bankruptcy.
You will have to wait and see what happens, or sell out now and walk away.
well I believe the pr said something different
like.... "The Company expects that shares of its common stock will have no value as a result of the Chapter 11 filing."
it did not say the shares WILL be worthless... they expect it to be. Very different verbage.
If what you say is true, the value would be zero by now....
go figure.
Dragon, did you not read what they said shares will be worthless so its dead, whom every is playin it now are worst gamblers than we were. They hopin for a spike but it will never go back to where it was.
lost like many of you did
,,,,,,,,,,,
Juat a note... Chap 11
is not a total BK but a REORG Bk....
They still will trade and hopefully stave off the creditors while it restructures it's finances. No more luxury vacations, 3 martini lunches.... they have to tighten the belt now.
Possible to see a bounce back later.
All is not lost yet.
There will no doubt be at least some moments of optimism as the scenario plays out. We should see some good trading opportunities in this stock in the days and weeks to come, regardless of the long term outcome. Better luck in your future investments/trades.
Damn... Thanks for the info! I will still hold on and hope for the best.
The stock will still trade for pennies give or take, on the pink sheets at least until they exit bankruptcy probably a few months from now. It almost looks like they did a prepack so this might not take too long by Ch. 11 standards. But to answer your question in a word, no. They are too far out of the money for the common shares to have a realistic chance of any long term survival. The only chance they had was to do some kind of debt for equity swap but it sounds like they ran out of time too quickly.
So is there any hope for this stock? Like if that company buys them for 50 Million? I'm trying to do my research because I lost BIG on this one.
praying for MDII to go to $2...i got like my last 20k in there...ill be all set if they get some deals...we'll see
I bought over 10000 shares when it dropped between $2.5 and $2. and i bought more when dropped on .5. I wouldn't sleep last day before drunk a lot of beer, i almose lost all my money too, Tatu99999. But, Tatu999, dont be sad, money is gone, one day will be back. Chance was made by self. I will keep holding.
nope sold at .06...im also pissed @ yahoo i bought 31....im quitting the stock market...ive been trading since 13 years old...im 21 now...ive lost over 60K...im done for now...
R u still holding man?? I am still holding! Cant take this much lost at this stage...waiting for major bounce than cut lost. For now...bag holder! U?
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Date Reg SHO Threshold Flag Rule3210 Flag Nov 1, 2007 Yes No Oct 31, 2007 Yes No Oct 30, 2007 Yes No Oct 29, 2007 Yes No Oct 26, 2007 Yes No Oct 25, 2007 Yes No Oct 24, 2007 Yes No Oct 23, 2007 Yes No Oct 22, 2007 Yes No Oct 19, 2007 Yes No Oct 10, 2007 Yes No Oct 9, 2007 Yes No Oct 8, 2007 Yes No Oct 5, 2007 Yes NoTransfer Agent: American Stock Transfer & Trust Company, 59 Maiden Lane New York, NY 10038 Company Contact Information: Corporate Headquarters 1010 Wisconsin Avenue Suite 600 Washington, DC 20007 http://corp.inphonic.com/pages/index.asp Investor Relations e-mail: investor@inphonic.com Phone: (202) 333-0001 Media & Analyst Relations e-mail: media@inphonic.com Management Team: Andy Zeinfeld Chief Executive Officer Andy Zeinfeld joined InPhonic in April 2006 as President of E-Commerce and was appointed Chief Executive Officer in October 2007. Prior to joining InPhonic, Zeinfeld served as RadioShack's Senior Vice President and Chief Retail Services Officer. A 28-year veteran of RadioShack, Zeinfeld is a widely recognized and respected leader in the wireless industry. During his time with RadioShack, Zeinfeld oversaw one of the largest wireless and communication service distribution programs in the United States, and maintains strong relationships with the largest carriers and manufacturers in the World. He joined RadioShack in 1978 as a sales associate and has also served the company as a computer marketing representative, computer center manager, district manager, director of leasing, senior director of leasing, and vice president RadioShack specialty retail group. Kenneth Schwarz Chief Financial Officer Kenneth Schwarz joined InPhonic in July 2007. Over an extensive career, Mr. Schwarz has held several executive roles in finance and operations across the technology and telecommunications industries. Before joining InPhonic, Mr. Schwarz served in senior executive positions, including CFO and subsequently President of Consumer Solutions at Intersections Inc. Prior to Intersections, Mr. Schwarz served as senior vice president of finance and information technology for WinStar Communications, and held executive positions with Cable & Wireless, Unitel Communications and MCI Communications. At MCI, Mr. Schwarz served as vice president and corporate controller. He is a C.P.A. who also previously worked as an auditor with Deloitte & Touche LLP. He holds a B.S. and M.B.A. from Indiana University. Gary J. Smith Chief Information Officer Gary J. Smith has served as our chief information officer and executive vice president since July 2000. From July 1999 to July 2000, Mr. Smith served as chief information officer and vice president of technology of Varsity Group Inc. (formerly known as VarsityBooks.com, LLC) an online retailer of new college textbooks. From September 1987 to July 1999, Mr. Smith served in various technology management positions at Discovery Communications Inc., an international media company, including most recently vice president of technology. Mr. Smith holds a B.S. from the University of Maryland. Frank C. Bennett III Chief Strategy Officer and President of MVNO Frank C. Bennett III has served as our president, MVNO services and chief strategy officer since March 2004. From March 2002 to March 2004 he served as InPhonic's chief operating officer. From August 2000 to August 2001, Mr. Bennett was senior vice president and group operations officer for the retail group of Verizon Communications Inc., a communication service provider. From October 1999 to August 2000, Mr. Bennett served as vice president, e-commerce and technology of Bell Atlantic Corporation (now Verizon Communications). From February 1998 to October 1999, he was vice president, customer billing of Bell Atlantic Corporation. In addition, from July 1996 to December 1998, Mr. Bennett served as a founder and vice president, call center development of Bell Atlantic Plus, a provider of bundled wireline and wireless services. Mr. Bennett holds a B.A. from the University of Virginia and an M.B.A. from The Wharton School of the University of Pennsylvania. Brian T. Westrick President of Wireless Activation and Services Brian T. Westrick has served as president of our wireless activation and services division since March 2004 and has held various other executive-level positions since joining us in June 2000. From December 1994 to June 2000, Mr. Westrick was vice president of sales and marketing for Universal Jet Trading, an international jet aircraft brokerage firm. From July 1991 to December 1994, Mr. Westrick was marketing director for Lease Audit and Analysis Services, a real estate consulting company. From June 1990 to July 1991, Mr. Westrick was a marketing representative with Xerox Corporation. Mr. Westrick holds a B.S. from the Wallace E. Carroll School of Management at Boston College. Walter W. Leach, III General Counsel and Secretary Walter W. Leach, III has served as our general counsel since January 2001. Mr. Leach served as corporate counsel of Snyder Communications, a marketing and communications solution provider from June 1997 to January 2001. From October 1992 to June 1997, Mr. Leach served as deputy corporate counsel for Inductotherm Industries, Inc., a privately held manufacturer. Mr. Leach holds a B.A. from Syracuse University and a J.D. from Vermont Law School. Board of Directors: http://investor.inphonic.com/profiles/investor/Directors.asp?sm_quote_field=&CName=&BzID=1461 News Items: Oct 24, 2007 - Filed 8K - Change in Directors or Principal Officers, Amendments to Articles of Inc. or Bylaws http://biz.yahoo.com/e/071024/inpc8-k.html Oct 11, 2007 - InPhonic Announces Appointment of Lazard as Financial Advisor -- Third Quarter 2007 Results to Fall Below Guidance http://news.inphonic.com/Pages/press_corporateDetail.asp?id=270 Sep 21, 2007 - InPhonic Promotes Andy Zeinfeld to CEO http://news.inphonic.com/Pages/press_corporateDetail.asp?id=267 Sep 10, 2007 - Ritz Interactive Selects InPhonic to Manage Wireless Category http://news.inphonic.com/Pages/press_corporateDetail.asp?id=265 Sep 5, 2007 - Brightstar and InPhonic Sign Definitive Agreement to Form Strategic Alliance -- New Alliance Sets Stage for Expanded Sales Opportunities and Better Operational Efficiencies for Both Companies -- http://news.inphonic.com/Pages/press_corporateDetail.asp?id=263 Aug 9, 2007 - InPhonic Announces Second Quarter 2007 Financial Results http://news.inphonic.com/Pages/press_corporateDetail.asp?id=260 Aug 9, 2007 - Brightstar and InPhonic Forge New Strategic Alliance http://news.inphonic.com/Pages/press_corporateDetail.asp?id=261 Jul 31, 2007 - InPhonic Schedules Second Quarter 2007 Earnings Conference Call http://news.inphonic.com/Pages/press_corporateDetail.asp?id=259 Jul 18, 2007 - InPhonic Names New Chief Financial Officer http://news.inphonic.com/Pages/press_corporateDetail.asp?id=256 Jun 20, 2007 - InPhonic First Quarter 2007 Earnings Conference Call http://news.inphonic.com/Pages/press_corporateDetail.asp?id=251 SEC Filings http://investor.inphonic.com/profiles/investor/secxml.asp?f=1&BzID=1461&to=sc&Nav=0&LangID=1&s=0 Company Issues: 1) The Company also announced that its financial results for the third quarter 2007 are significantly below previously announced guidance. “Our results for the third quarter did not meet our expectations. We have taken significant cost-cutting steps and are working with Lazard to address our financing requirements. The Company requires funding to continue operations, fund our losses incurred to date and to transition our operations to achieve profitability,” said Ken Schwarz, InPhonic’s Chief Financial Officer. “This has been a turbulent year for InPhonic. We believe the critical changes that we have already begun to implement are necessary for our ongoing business and to achieve profitable operations, but we cannot provide any assurance that we will receive the funding required in the near term to continue these changes for the business.” Management will provide a revised outlook on financial condition and operational changes at a later date. 2) Brightstar Termination The Company also announced the termination of the proposed Brightstar supply chain services partnership which was announced last month. “While I am disappointed the Brightstar deal could not be implemented, we believe that there continue to be potential opportunities for us to work together,” said Andy Zeinfeld, InPhonic’s CEO. 3) Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement On October 5, 2007, the Company received of a notice of default and reservation of rights from its secured lenders under that certain Credit Agreement, dated November 7, 2006, as amended (the “Credit Agreement”). The events of default include (i) failure to pay interest on the loans on October 1, 2007; (ii) failure to conclude the Inventory Transaction (as defined in the Credit Agreement); and (iii) failure to enter into a definitive agreement to provide for the outsourcing of the Company’s inventory management, logistics and fulfillment obligations by October 5, 2007. The lenders reserve their right to exercise any and all available rights and remedies available under the Credit Agreement. To date, the Company has not received notice that the lenders have exercised any such rights or remedies. Company Solutions: 1) Senior Management Restructuring On October 1, 2007, Andy Zeinfeld was promoted by the Board of Directors to assume the role of Chief Executive Officer. Mr. Zeinfeld came to InPhonic last year after 28 years with RadioShack Corporation where he had most recently served as Chief Retail Services Officer. In July 2007, Ken Schwarz was named InPhonic’s Chief Financial Officer after a financial career that spanned more than twenty-five years at public and private companies including MCI, Cable & Wireless, WinStar Communications, Intersections and Deloitte & Touche. InPhonic has also terminated Brian Curran as the Company’s Chief Operating Officer. The Company has reassigned Mr. Curran’s responsibilities across existing business divisions as part of a more streamlined operating structure. 2) Board of Directors has selected Lazard Middle Market to conduct, in conjunction with management, a full review of the Company’s financing and strategic alternatives to increase the Company’s cash liquidity and to maximize shareholder value. These alternatives could include a re-financing of existing credit arrangements, merger, sale, strategic alliance or other transaction. “We believe Lazard will provide us critical financial advisory services as we explore different strategic directions for the Company,” said Andy Zeinfeld, Chief Executive Officer of InPhonic. Lazard is one of the world’s preeminent financial advisory and asset management firms. The firm provides advice on mergers and acquisitions, restructuring and capital investment, as well as strategic financial services to corporations and governments. Lazard http://www.lazard.com/ Lazard is a preeminent international financial advisory and asset management firm that has long specialized in crafting solutions to the complex financial and strategic challenges of our clients. We serve a diverse set of clients around the world, including corporations, partnerships, institutions, governments and high-net-worth individuals. Our Financial Advisory business provides advice in connection with a wide range of strategic and financial matters that are typically of great importance to our clients. Our goal is to continue to grow our business by fostering long-term, senior-level relationships with existing and new clients as their independent advisor on strategic transactions such as mergers, acquisitions, restructurings and other financial matters. 3) No current action against the company exists from it's creditors at this time. This issue is being addressed by the new management under guidance from Lazard and details will be released when available. 4) Fourth Quarter 2007 financial statements are expected to improve based on current company performance.
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