Key3Media Group, Inc. , the struggling parent company of the Comdex technology trade show, said it would file for bankruptcy today with a pre-packaged reorganization plan involving investment firm Thomas Weisel Capital Partners.
The Chapter 11 bankruptcy filing is expected to help the company, which produces the Comdex, NetWorld+Interop and Seybold Seminars trade shows, restructure $372 million worth of debt that swallowed its cash and forced it into negotiations with creditors.
Key3Media said all its tradeshows and conferences slated for this year would take place, including the NetWorld+Interop in Las Vegas (April 27-May 2), JavaOne San Francisco (June 9-13), Seybold Seminars San Francisco (September 22-25); the fall Comdex show in Las Vegas (November 15-20); and all international events and Key3Studios events.
Thomas Weisel Capital Partners (TWCP), which holds about 68 percent of Key3Media’s bank debt and about 38 percent of its bonds, said it would provide $30 million worth of debtor-in-possession financing in order to fund the company’s ongoing operations and help it continue producing trade shows while it reorganized operations.
The company has indicated for months now that it might not have enough cash to continue operations, especially as the technology recession resulted in sharply lower attendance at its trade shows.
For the third quarter of 2002, Key3Media reported revenues of $38.4 million, down by about 25 percent from its $51.5 million in revenues during the same, year-ago period. Its net loss for the quarter was $316 million, compared to a net loss of $3.6 million in the same quarter of 2001, a loss driven largely by goodwill write-downs on its assets in the post-bubble market environment.
By the fall of 2002, Key3Media had scaled back its 2003 trade show schedule, cut about half its staff, closed its offices in Needham, Mass., and moved to transfer its operations to Los Angeles and Foster City, California.
Following warnings that it may not have enough cash to make debt payments, and after a particularly sluggish Comdex show in November, the company missed interest payments in December and went into default on its loans.
Key3Media officials said the reorganization plan would help eliminate about 87 percent of its debt and reduce its obligations to about $50 million.
