09.17.2009 05:00 PM
Sencore Deal to Buy Wegener Cancelled
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
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.
“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
“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
“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
December 4, 2009: “Wegener Reports Fiscal
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.