WRSP up again today after announcing bankruptcy......that's over 30% up in two days!
Worldspace Chapter 11: latest
Chris Forrester , on 21-10-2008
Sources at bankrupt Worldspace's Washington HQ say that virtually all the programming and content staff have now been dismissed, with a source stating that the dismissed personnel have not been paid salaries owed to them (which may be remedied once Worldspace can access funds). The same process is well advanced in India where staff have been let go.
It seems the company is now wholly concerned in selling off assets, of which more in a moment. The most telling comment comes from one observer, who requested anonymity, but asked ìhow such a gossamer-thin business model ever got SEC approval for a public offering in the first place.
Meanwhile, Benoit Chereau is CEO at Worldspace Europe, and has spent the past few days in urgent discussions with various advisors and consultants as to the state of his European business following on from the parent companyís Chapter 11 declaration on Oct 17. While Worldspaceís Washington staffers are owed $1.35m in back-pay and related obligations, its handful of French employees have the protection of French labour laws to help them through any similar challenge.
Unfortunately, M Chereau is forbidden to speak with the press and so the precise position of Worldspaceís non-USA investments remain somewhat clouded in mystery. It remains unclear as to whether Worldspaceís European subsidiaries remain free to do business, or whether their European assets ñ such as they are ñ are also bound up in the US restructuring, or remain pledged or mortgaged to Worldspaceís creditors.
Worldspace in Washington is borrowing another $13m in order to help pay day-to-day bills over the next 90 days while it seeks a buyer for its assets. Worldspaceís declared assets total $307.4m, and its liabilities a massive $2.12bn. The broadcaster had 163,000 subscribers, mostly in India, as at Dec 31st last year, generating a trifling $3.4m per half-year in subs income.
Those assets include a pair of satellites, and a third (which Worldspace described as completed and currently in storage) which, with their related systems, it recently valued at a total of $272m. It has no other notable assets other than ìproperty and equipmentî which it values at $13m. However, as CFO Sridhar Ganesan told us on July 27, All the assets of the Company, including the AfriStar satellite and interest in the spectrum rights, are already pledged to the lenders. There has been no substantive change in the security provided to them and there will be no impact on the ongoing operations in Europe as well as in Italy because of the pledging of these shares.
While it has many pressing debts, it also has a growing list of creditors, including an annual set of occupational leases that costs some $4m to fund. The leases are ìnon cancellableî and run to 2016, and thus have an obligation attached to them of $27.8m.
Worldspace also has an obligation to buy 722,445 satellite radio chipsets for a sum of $18.2m, due to be paid on June 30 2008. It is now in default on that debt. Back in December 2004 it also restructured a massive $1.55 billion-worth of notes payable and cash advances into a Royalty Arrangement, and which saw Worldspace enter into an obligation to pay 10% of all earnings (pre-EBITDA) until 2015.
Meanwhile, the Class Actions mounted against Worldspace, founder, president & CEO Noah Samara and other company officials continue. The Actions started following Worldspaceís IPO, and allege violations of the US Securities Act, and that subscriber numbers were allegedly overstated.
© Rapid TV News 2008