Ultimate Electronics files for bankruptcy
Wednesday, January 12th 2005, 9:44 am
By: News On 6
THORNTON, Colo. (AP) _ Consumer electronics retailer Ultimate Electronics filed for Chapter 11 bankruptcy Tuesday and secured financing officials said will help it reorganize.
Ultimate Electronics, which also operates as Soundtrack in Colorado, in December told federal regulators it probably wouldn't have enough cash to fund operations past January.
The company said Wells Fargo Retail Finance has agreed to provide up to $113 million in debtor-in possession financing, with new Chairman of the Board Mark J. Wattles providing an additional $5.6 million. Both arrangements are subject to court approval.
All of the company's directors have resigned from the board, including former Chairman William Pearse.
Wattles also agreed to a two-year option to buy 1.8 million common shares for the lesser of 65 cents apiece or a five-day average closing price.
``After weighing all available alternatives, we believe this is the best solution for Ultimate to remain a viable business going forward,'' Dave Workman, president and chief executive, said in a statement. ``We welcome the significant retail experience and resources that Mr. Wattles brings to our current situation.''
Ultimate Electronics' shares fell 25 cents, or 19.23 percent, in after-hours trading on the Nasdaq.
Pending court approval, the company said it plans to honor its returns, exchanges, credits and layaway programs at each store. Salaries and benefits to employees will also continue at the same level, the company said in a statement.
The company has stores in Arizona, Idaho, Illinois, Iowa, Kansas, Minnesota, Missouri, Nevada, New Mexico, Oklahoma, South Dakota, Texas and Utah.