Velti Inc., a provider of technology for marketing on mobile devices, filed for bankruptcy protection to arrange a sale of its U.S. businesses.
The company, with operations in San Francisco, plans to auction some assets with an affiliate of GSO Capital Partners LP, the credit division of Blackstone Group LP, acting as the initial, or “stalking-horse,” bidder, Tom Becker, a spokesman for Velti, said in an e-mail.
Velti, a U.S. unit of Velti Plc, listed assets of as much $50 million and debt of as much as $100 million in Chapter 11 documents filed in Delaware today. Its Air2Web Inc. unit, based in Atlanta, also sought creditor protection. Velti Plc, which trades on the Nasdaq, isn’t part of the bankruptcy process.
“This is a great partner for us,” Velti Chief Executive Officer Alex Moukas said about GSO in a phone interview before the filing. “They have proven to be very supportive both in terms as a buyer of parts of our business but also as a lender of the remaining of our business that is not sold to them.”
Although the business lines of Air2Web’s India unit and Velti’s U.K. operations, including Mobile Interactive Group Ltd., are included in the proposed sale, those entities aren’t included in the bankruptcy and are continuing normal operations, Moukas said.
Velti today also announced that its Mobclix unit was winding down business under Chapter 7 of the U.S. Bankruptcy Code. It’s the only one of the company’s businesses that will cease operations, according to a statement.
GSO has agreed to provide as much as $25 million in debtor-in-possession financing, including $10 million in cash, to support the businesses included in the proposed sale, he said.
“One of the things that made this deal so appealing to us is the fact that we will provide 100 percent continuity for our customers so our customers won’t see any disruption,” Moukas said.
Velti has requested a Dec. 9 auction, if one or more qualified bids are received in addition to the stalking horse bid, followed by a Dec. 16 sale hearing. The company said the transaction should be completed by the end of the year.
“With the debtors having suffered through considerable operating and financial stresses during the past year, an expedited sale of their business is not only preserving the underlying value of their operations by providing customers and employees with a clear path forward, but in satisfying the obligations to their creditors,” Stuart Brown, the managing partner at DLA Piper LLP and an attorney for Velti, said in court papers.
The company had been in default under a credit agreement dated Aug. 10, 2012, with HSBC Bank USA NA as administrative agent. As of today, the amount outstanding under the agreement is $57.5 million, exclusive of interest, according to court papers.
After failing to obtain additional financing from HSBC, the company engaged Jefferies & Co. to explore strategic financing and sale options for the company and its units, according to the filing.
“It became clear that an alternative path was for the sale of the debt under the credit agreement in conjunction with a broader sale process,” Jeffrey Ross, chief financial officer of Velti Plc, said in court papers.
On Nov. 1, units of GSO bought the outstanding debt. The company owes $6.2 million to unsecured creditors. T-Mobile USA Inc. is the largest with a claim of $1 million, court papers show.
Operations in the U.K., Greece, India, China, Brazil, Russia, the United Arab Emirates and elsewhere outside the U.S. didn’t seek protection and business there will continue as usual.
The case is In re Velti Inc., 13-bk-12878, U.S. Bankruptcy Court, District of Delaware (Wilmington).