Troubled ZVUE Restructures Deal With Eric Bauman; Gets $1M Financing
Tuesday, July 22, 2008; 2:07 PM
ZVUE, the maker of MP3 players and the owner of comedy site eBaumsWorld (just those two things should tell you what you need to know), has restructured its purchase agreement with eBaum's proprietor Eric Bauman. The company, then known as HandHeld Entertainment, acquired eBaum's for up to $52.5 million in cash and stock last summer. Since then, the company's fortunes have sunk precipitously, with its stock now trading at $.17 per share. In April it received a delisting notice from the NASDAQ, where it still trades, and it received another one yesterday, giving it until August 1 to come up with a plan.
Under the new arrangement, Bauman will receive a current payout of $1.05 to $1.25 million, and the company's current obligation to him of $417,000 has been reduced to $250,000, with an additional $150,000 payable over the next five months.As for the total potential earnout, it's actually been upped from $27.5 million to $32.5 million, but it's based on the company generating at least $3 million in cash fllow. Bottom line: Bauman has agreed to take less today, with the potential of higher upside down the road. Finally, Bauman has been named manager of the PopSauce network of sites (a collection of sites the company owns), which will be managed form his based in Rochester, NY.
On the other side of the business, the MP3 players: ZVUE CTO is lending the company $1 million to continue pushing this business. Added: As a commenter reminds, the ZVUE CTO is Carl Page, brother of Larry, the co-founder of a major player in online search. Release.