IT trade show company Key3Media Group has filed for Chapter 11 bankruptcy protection as it undergoes financial reorganisation. However, all of its conferences and shows, including Comdex Fall 2003, will proceed this year as planned.
The company said its reorganisation plan would allow it to reduce its debt by 87 per cent from about $US372 million to $US50 million, while eliminating all of its existing preferred stock and common equity. The plan would cut the company's annual interest expenses from about $US38 million to $US3.4 million.
The company said it had run into financial difficulties because of the downturn in the tech economy and the aftershocks from the 9/11 terrorist attacks.
Private equity fund company Thomas Weisel Capital Partners is providing Key3Media with $US30 million in debtor-in-possession financing and has agreed to provide money for the company as the reorganisation continues.
Key3Media said it would continue its business operations and retain its existing management team throughout the reorganisation. The Chapter 11 plan was filed in US Bankruptcy Court for the District of Delaware.
The trade show company said its shows and conferences would take place as scheduled. These included Comdex Fall (November 15-20 in Las Vegas), NetWorld+Interop (April 27-May 2, Las Vegas), JavaOne San Francisco (June 9-13).
"This comprehensive plan is designed to put Key3Media back on track to long term financial health while giving us the capital strength and operating flexibility we need to hold all of our scheduled trade shows and conferences," Key3Media's chairman and CEO, Fredric D. Rosen, said. "Our clients will now be able to sign up for NetWorld+Interop, Comdex and our other shows with full confidence."
Managing partner of Thomas Weisel Capital Partners, Lawrence B. Sorrel, said Key3Media was a fundamentally sound company that had been hurt by its capital structure and the declines in the IT and networking industries.
"We intend to work closely with the board, management and Key3Media's talented workforce to help the company execute a successful turnaround," he said.
A day after Key3Media's bankruptcy filing, a rival company announced that it would hold an IT show in Las Vegas at the same time as the Comdex show.
Jupitermedia said that it would hold its first Computer Digital Expo this fall. The show, America's 21st Century Information Technology Conference & Expo, would run from November 17-21 at the Mandalay Bay Convention Centre and hotel campus.
Chairman and CEO of Jupitermedia, Alan Meckler, said that his company's new show was being planned because Key3Media's bankruptcy left question marks about the future.
Nobody could definitively say one way or another that Key3Media would, in the end, come out of its financial problems and still be able to hold shows such as Comdex in November, he said. Potential exhibitors hadquestions about its viability: "When you have a company in bankruptcy ... would you really send your money in for a space?" he said. "This is a very fragile situation."
Jupitermedia decided to go ahead with its plans for another show that same week to be able to fill in any gaps. "I like a good fight," Meckler said. "And if I don't make it, I don't make it."