DULUTH, GA.: Wegener Corp. today announced the cancellation of it’s letter of intent with Sencore of Sioux Falls, S.D. Sencore and signed a non-binding letter of intent to acquire Wegener in July. The letter indicated Sencore for take all of Wegener’s (NASDAQ: WGNR) outstanding shares of common stock for cash consideration of $6 million. Wegener said the letter expired Sept. 13, that its board had “terminated” the document, and that Sencore was notified today.
Wegener, which distributes content via satellite, said it received an amendment from its senior lender, extending its line of credit to fund operations until the Sencore deal closed. That amendment came through yesterday, Wegener said, but was contingent on it being acquired by Oct. 15.
“The amendment is subject to the execution of a merger agreement or asset purchase agreement, which is satisfactory to the bank, between Wegener Corp. and a third party by Oct. 15, 2009,” Wegener said. “Failure to satisfy this condition would constitute an event of default under the line of credit agreement, unless the bank otherwise waives the condition, which it is not obligated to do.”
“The amendment extends the term of the line of credit agreement through Nov. 30, 2009, and allows for over advances up to $500,000 beyond the agreed upon collateral formula, which is primarily based on eligible accounts receivable and inventory.”
These advances--up to $4 million total at 2 percent above the bank’s prime rate--are contingent on a merger or asset purchase agreement executed by Oct. 15.
“Because the amendment was premised on the possibility of a merger between Wegener Corp. and Sencore, and given the termination of the letter of intent with Sencore, Wegener is now in discussions with the bank regarding how to move forward on a path to financial stability for the company,” Wegener said. “There can be no assurance that Wegener will reach agreement with the bank in these discussions or that it, in accordance with the amendment, will successfully enter into a merger or asset purchase agreement with a third party by Oct. 15, 2009 or that any such agreement, even if executed, will be satisfactory to the bank.
“Wegener Corp. is not at present in discussions with Sencore, or any other third parties regarding a merger or asset purchase agreement, although it may continue to pursue such a transaction.”
More from TVB on Wegener
July 21, 2009: “Sencore Aims to take Wegener in $6 Million Deal”
Sencore has made the first move to buy Wegener, the Duluth, Ga., content distributor, for the equivalent of $6 million. Sencore, a signal processing specialist, signed a non-binding letter of intent to acquire Wegener.
July 14, 2009: “Wegener’s Fiscal 3Q Revenues Down 34 Percent”
“Our third quarter results were down from prior years but did fall in line with our expectations for the quarter given the economic climate,” said Robert Placek, chairman and CEO of Wegener. “Based on the realities of the market conditions, we made cost reductions in the organization in the third quarter to better align our cost structure with currently achievable revenue levels. We do expect an operating loss in the fourth quarter of fiscal 2009.”
April 14, 2009: “Wegener Breaks Even in Fiscal 2Q09”
“Revenues were almost double the level in the first quarter and we do not anticipate returning to the Q1 revenue level… We expect an operating loss in the third quarter and are focused on controlling costs to see us through these challenging times.”
December 4, 2009: “Wegener Reports Fiscal 4Q”
Wegener posted net earnings of $873,000, or 7 cents a share, on revenues of $5.4 million for the quarter. During the same period a year ago, Wegener logged $142,000, or a penny a share, on revenues of $5.7 million. 4Q revenues included a gain on patent sales totally $894,000.
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