Dear Global Citizens and friends of Africa/Ethiopia:
Lessons on how to seek Bankruptcy Protection a case of WorldSpace - A Global Sateelite Radio Service based in Silver Spring, MD
Re: Corporations increasingly seeking bankruptcy protection, is this the way forward in the new world of Economic Meltdown and Bailout?
A new technology firm owned and managed by an Ethiopian American lawyer is seeking bankruptcy protection. Here is a very interesting story of a new Diaspora story, from rags to riches and at last being cauhgt up in the Global Economic Meltdown.
Our weekly global radio broadcast at Voice of the Patriots (Hager-Fiker), we have been discussing the potential impact of the Financial Meltdown on new immigrants, specially those engaged in service industry like hotels, restaurants, transportation and even health care.
We never thought that well entrenched technology corporations funded in Billions like World Space will be the first to declare for bankruptcy protection.
It is becoming interesting that even technology companies that have satellite products and not terrestrial ones will be the first ones to seek bail out.
What are the lessons of this interesting bankruptcy protection.
I. Business Fact Sheet
Business: XM Satellite Radio Broadcast
Owner: Noah Samara (47% share holder)
Base: Silver Spring MD, USA
Amount: $2.12 Billion in Debt
Rescue plan: Court Appointed Bankruptcy Protection.
II. The Protection Plan
1. An attempt to seek a buyer at this critical time and paying employees in the transition period.
2. Trying to get funding from its creditors of up to $2 million initially and get funding with #13 million in debtor-in-possession for up-to 90 days.
3. A reorganization of existing company while it seeks a buyer for its operations or assets.
4. Worldspace files bankruptcy, listing $2.12 billion in debt
III. The lesson
1. The company, which intends to sell off its assets or recapitalize the business, is seeking court approval of a $13 million bankruptcy loan provided by a group of hedge funds to continue operating while under bankruptcy-court protection.
2. Worldspace was founded in 1990 with the intent to provide satellite radio services to the emerging markets of Asia and Africa.
3. Current Assets: The company has two satellites currently in orbit and a third in storage.The company, which broadcasts its satellite radio services to more than 170,000 paid subscribers in 10 countries throughout Europe, Africa and Asia, sought Chapter 11 protection in the U.S Bankruptcy Court in Wilmington, Del.
4. Asset/liabilities. It listed assets of $307.4 million and liabilities of $2.12 billion
5. The planned bailout: The company, which broadcasts its satellite radio services to more than 170,000 paid subscribers in 10 countries throughout Europe, Africa and Asia, sought Chapter 11 protection in the U.S Bankruptcy Court in Wilmington, Del. It listed assets of $307.4 million and liabilities of $2.12 billion.
6. The Stakeholders.
6.1 Yenura Pte. Ltd., a Singapore-based company controlled by Mr. Samara, is WorldSpace's largest unsecured creditor, owed
$55.2 million.
6.2 Number 2 is Micronas GmbH, owed $18.2 million, and
6.3 Fraunhofer Institute for Integrated Circuits, owed $4.4 million.
6.4 Mr. Samara is the largest shareholder of the Silver Spring, Md. company, owning 47.15% of the firm.
6.5 Aletheia Research & Management Inc., owning 37% percent, and
6.6 Natixis Asset Management Advisor LP, owning 5.25%, are the other major shareholders of WorldSpace
The most critical lesson is that corporations have a much more secure protection environment compared to individuals and it is in our best interest to incorporate ourselves as business stakeholders if we want to survive the Global Economic Meltdown. The Bailout is not designed to help individuals be it home owners defaulting or those with bad credit history. It is designed to help out corporations.
Citizens of the USA and Globe, incorporate fast yourselves and your families if you want to survive the current economic crisis.
It helps to incorporate in times of crisis and opportunities. That is the lesson of WorldSpace and its challenges in todays economic climate.
Worldspace gets court approval for bankruptcy protection
By BizJournal | October 23, 2008
Satellite radio pioneer Noah Samara (Photo: Addis Tribune) BizJournal - Satellite radio broadcaster WorldSpace Inc. has won bankruptcy court approval for a plan that will let it continue paying employees and seek a buyer.
The Silver Spring-based company, which filed for voluntary bankruptcy protection last week, will get funding from its creditors of up to $2 million initially. Creditors have agreed to fund the company with $13 million in debtor-in-possession financing for up to 90 days. WorldSpace says it will be seeking court approval to access more of those funds in coming weeks.
State Street Bank has been appointed as the company’s financial adviser.
WorldSpace says it has begun the process of finding a buyer for its operations or assets. It hopes to raise sufficient capital to repay senior secured notes and convertible notes. A reorganization of the existing company remains an option.
Worldspace files bankruptcy, listing $2.12 billion in debt
By Eric Morath, Dow Jones
WorldSpace Inc., a Maryland-based operator of satellite radio services overseas, filed for Chapter 11 bankruptcy protection Friday after repeated failures to meet debt obligations and to pay its employees.
The company, which broadcasts its satellite radio services to more than 170,000 paid subscribers in 10 countries throughout Europe, Africa and Asia, sought Chapter 11 protection in the U.S Bankruptcy Court in Wilmington, Del. It listed assets of $307.4 million and liabilities of $2.12 billion.
The bulk of that debt, some $1.8 billion, is a contingent obligation under a royalty deal if the company's pretax earnings reach a certain level, according to company spokeswoman Judith Pryor.
In court papers, Chief Executive Noah A. Samara said the company was forced to file for bankruptcy after seeking four forbearance agreements with its noteholders since June.
In addition, WorldSpace has failed to pay some of its workers for two months, causing "significant employee attrition," Mr. Samara said. The company owes 50 "critical employees" $1.35 million in back pay.
"As a result of WorldSpace's growing concern regarding its inability to make timely payments to critical employees and other essential creditors, WorldSpace determined that it is in its best interests and the best interests of its subsidiaries and stakeholders to file these chapter 11 proceedings," said Mr. Samara, one of the key figures in the early stages of XM Satellite Radio Holdings Inc.
The company, which intends to sell off its assets or recapitalize the business, is seeking court approval of a $13 million bankruptcy loan provided by a group of hedge funds to continue operating while under bankruptcy-court protection.
Worldspace was founded in 1990 with the intent to provide satellite radio services to the emerging markets of Asia and Africa. The company has two satellites currently in orbit and a third in storage.
Among the WorldSpace's so called first-day motions the company is asking to secure the bankruptcy loan and use some of that funding to pay its employees. The company is also seeking the continued use of its bank accounts.
Without the bankruptcy financing, the remaining critical employees will likely depart, which would "impair" WorldSpace's ability to operate the satellites and continue as a going concern, Samara said.
Yenura Pte. Ltd., a Singapore-based company controlled by Mr. Samara, is WorldSpace's largest unsecured creditor, owed $55.2 million. Number 2 is Micronas GmbH, owed $18.2 million, and Fraunhofer Institute for Integrated Circuits, owed $4.4 million.
Mr. Samara is the largest shareholder of the Silver Spring, Md. company, owning 47.15% of the firm. Aletheia Research & Management Inc., owning 37% percent, and Natixis Asset Management Advisor LP, owning 5.25%, are the other major shareholders of WorldSpace.
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