Borrows $4M, secures $25M credit line to stave off bankruptcy
By Michael Silence (Contact)
Saturday, May 3, 2008
IdleAire Technologies' success in securing a line of credit appears
to be good news for the Knoxville-based company that said last month it
may have to file for bankruptcy.
"It is going to help them stay alive," said Joe Carcello, co-founder
and director of research at the University of Tennessee's Corporate
Governance Center.
"The fact that an institution is willing to extend additional financing" to the company is a positive sign, he added.
IdleAire, which has said it needs cash to stave off bankruptcy, has
borrowed nearly $4 million and established a line of credit of up to
$25 million, according to a Wednesday filing with the Securities and
Exchange Commission.
The company also has hired a corporate turnaround specialist to advise it.
"As of April 30, 2008, the Company has borrowed approximately $3.7
million under the Credit Facility, and the proceeds are being used for
general corporate purposes of the Company to pay disbursements approved
by the lenders. To satisfy one of the closing conditions of the Credit
Facility, the Company has retained CRG Partners Group LLC, a
turn-around management and restructuring consulting firm," according to
IdleAire's SEC filing.
The filings also show five executives received compensation in 2007 totaling more than $1.3 million.
The company declined comment except to say, "the filing speaks for itself," company spokesman John Doty said.
The action comes after IdleAire warned last month that if it didn't
get "immediate working capital," it would be forced to file for
bankruptcy protection.
"Losses and liquidity deficiencies raise substantial doubt about our
ability to continue as a going concern and, therefore, our ability to
realize our assets and discharge our liabilities in the normal course
of business," the company said in an annual report it filed April 15
with the SEC.
While it considers going public, IdleAire is required to file
financial reports with the SEC. The company has not said when it plans
to offer public stock, how many shares will be offered or at what price.
In its SEC filings, the company held out some hope for recovery,
noting that it also has hired Getzler Henrich & Associates LLC and
KPMG Corporate Finance LLC to develop a plan that should provide enough
liquidity to finance its working-capital and capital-expenditure
requirements for the next year. The company acknowledges that there is
no assurance such a plan can be executed on acceptable terms, if at all.
IdleAire also disclosed that five executives received compensation in 2007 ranging from $198,000 to $363,000.
IdleAire manufactures and maintains in-cab electrification units for
the long-haul trucking industry. The units supply electricity, heat,
air conditioning, Internet and satellite TV connections, on-demand
movies and even educational videos through consoles that fit in truck
windows for a fee. The power units allow truckers to turn off their
engines, thus saving diesel fuel and reducing pollution.
The company's national network includes 130 sites with 8,423 parking spaces in 34 states.
Business writer Michael Silence may be reached at 865-342-6310.
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