Worldspace is in financial trouble again. Almost exactly one year since the company filed for Chapter 11 bankruptcy protection (Oct 17 2008), an emergency motion just filed before the Delaware Bankruptcy Court by Worldspace lawyers admits the company needs immediate financing to avoid liquidation. Liberty Satellite Radio, a subsidiary of Liberty Media, is prepared to lend some cash.
Indeed, the situation is so serious that many of Worldspace’s official advisors and lawyers have not had their fees met, and these additional debts now amount to almost $500,000 and extend back in some cases to costs incurred in April, and “the Debtors are in arrears for certain of their expenses for October” says the filing.
The Worldspace motion, lodged by their legal advisors, asks the Court to extend, modify and increase their Debtor in Possession (DiP) financing. Liberty Satellite Radio is content to lend Worldspace cash “as a potential bridge to a strategic transaction between Liberty and the debtors (Worldspace),” said the Court application. “Such a strategic transaction appears to be the debtor’s only hope of confirming a plan and making distributions to creditors,” added the filing. This is the fourth time that Worldspace has asked for an extension to DiP arrangements, and would run until the end of this month. Worldspace is looking for $4.3m additional borrowings.
Liberty bought the previous lenders’ debts on Sept 2, and Worldspace said at the time that no payments could be drawn down from Liberty’s cash collateral without Liberty’s prior consent. Liberty now effectively controls Worldspace actions because of its funding agreement. “Liberty has indicated an interest in exploring a strategic transaction with Worldspace,” said the Court filing, and is conducting due diligence ahead of negotiations. Liberty has approved the extension of time, and the extra borrowings, subject to Court approval. Liberty will lend the cash under a “Senior Secured Super Priority” DiP credit agreement. Worldspace will have obligations at the end of this exercise of some $18.6m.
However, Worldspace has renewed a contract with a customer and the proceeds from this contract will provide the broadcaster with sufficient cash to operate, albeit under Chapter 11 protection.
Okay, does this mean that South African subscribers to Worldspace will get back the channels we lost more than a year ago? (The Gold subscription users lost most of those channels on that bouquet, including CNN, Bloomberg, UPop, etc.) If not, why not?
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Tuesday, 20 October 2009 11:30
Wounderlad
An Ameriacn Company doing an irresponsible Business in India,cheating its Ex-Employees by holding back their Full & Final Settlement without any shame, some idiot Indian's supporting to do an irresponsible business.
