Executives at Key3Media, an IT trade show and conference producer,
announced Thursday evening it would restructure its operations after next
week’s Comdex exhibition ends, and indicated Chapter 11 bankruptcy as one
of the options.
While officials were not available at press time, the company’s third
quarter results included a reason for the decision to restructure: while
Key3Media was able to meet its financial obligations to creditors for this
quarter, it would likely not be able to meet next quarter’s payment.
Key3Media also declined to hold a conference call on its third quarter
results, likely because it did not want to field questions about its
restructuring.
Citing the money coming into this year’s Comdex was not enough to support
the costs incurred to set up the show, executives said “there is a
substantial risk that (we) will be unable to pay the interest payment on
its senior subordinated notes due on Dec. 16…(we) believe this process
represents the best alternative in these difficult times for preserving the
value of its brands and businesses for its stakeholders and maintaining
continuity of services to its exhibitor and attendee clients.”
Last month, the company shuttered
its Massachusetts office and scaled back its regional Comdex shows to focus
on the national show.
This hasn’t been a good year for Key3Media: for the first nine months of
this year, it had earnings before interest, taxes, depreciation and
amortization (EBITDA) revenues of negative $299.6 million and a net loss of
$686.2 million.
The huge loss is accounted to new financial standards established by the
Securities and Exchange Commission (SEC), which calls for more details in
its reports from publicly traded companies. As a result, Key3Media
recorded a $344.6 million charge in the first quarter and $315.6 million
charge in the third.
The Chapter 11 bankruptcy threat as a bargaining tool with creditors to
adjust payment contracts is being used with success at one of the largest
telecom providers in the U.S. WorldCom, which is going through the largest bankruptcy
in U.S. corporate history, is expected to come out of its Chapter 11
proceedings with a significantly decreased debt load and a clean bill of
health to resume its business; this, after inflating
billions of dollars in revenues.
