SonicBlue is filing for reorganisation under federal bankruptcy laws and plans to sell off the divisions that make the popular consumer devices ReplayTV, the Rio MP3 player, and entire GoVideo business unit.
The company filed for Chapter 11 bankruptcy protection with the United States Bankruptcy court of the Northern District of California, San Jose Division. SonicBlue plans to sell the ReplayTV and Rio product lines to D&M Holdings, parent of home electronics makers Denon and Marantz Japan.
SonicBlue also announced a definitive agreement to sell its GoVideo business unit, that makes integrated DVD+VCRs, Dual-Deck VCRs and digital home theatre systems, to Opta Systems for about $US12.5 million. That company has ties to SonicBlue; Opta's vice-chairman, Roger Hackett, is a former vice-president of SonicBlue and for a decade was chief executive officer of Sensory science, GoVideo's original developers.
The proposed deal for ReplayTV and Rio would give SonicBlue $US40 million, less up to $US5 million in liabilities. Any agreements must be approved by the bankruptcy court.
SonicBlue representatives said the transactions should be completed by the end of April.
SonicBlue CEO, Gregory Ballard, said that the company's business units would be better able to function with "better-heeled owners". Sales of those divisions and the reorganisation under Chapter 11 would allow SonicBlue to stay in business while moving the individual business units to the new owners.
"The continued support of our manufacturers and retailers will play an integral role in our ongoing efforts to make the changes that will enable the continued growth and success of our products," Ballard said.
Opta is eager to take on the GoVideo technology, according to both Hackett and company chairman, Carmine Adimando.
"We believe that Opta Systems can unlock GoVideo's true potential and take full advantage of the unprecedented growth in the digital video marketplace," Adimando said.
SonicBlue ran into controversy last year when a judge ordered it to devise a way to record the viewing and usage habits of customers of its ReplayTV 4000, to find out if they were illegally copying and sharing television shows and movies. The order was set aside, but SonicBlue remains under legal pressure by Hollywood firms eager to quash piracy opportunities.
The company announced updates to its popular Rio MP3 player in late 2002. It unveiled a new GoVideo unit, a networked DVD player, at the US Consumer Electronics Show in January.
SonicBlue has received a credit agreement to provide $US4 million in additional financing and hopes to retain Houlihan Lokey Howard & Zukin Capital as financial advisors and Pillsbury Winthrop as legal counsel.