DRI Plans to Sell Operations in Section 363 Sale
DRI Corporation, a digital communications technology provider in the global surface transportation and transit security markets, announced that it has filed for Chapter 11 in the U.S. Bankruptcy Court in the Eastern District of North Carolina and plans to sell its assets and operations under section 363 of the U.S. Bankruptcy Code.
As previously announced in a press release dated April 15, 2011, DRI Corporation’s Board of Directors formed a Special Committee to consider and evaluate the company’s strategic alternatives. The Special Committee, which retained the investment banking firm of Morgan Keegan & Company, Inc., oversees this process on behalf of the company’s Board of Directors and shareholders.
David L. Turney, the company’s chairman of the Board of Directors and CEO, said: “Our decision to sell DRI through the 363 process is being undertaken to ensure that we preserve value; absent this action, the company would be unable to continue at least the U.S. operations and fulfill duties to U.S. lenders. Therefore, after careful consideration of the company’s present financial constraints stemming from, at least in substantial part from the ongoing global economic recession, we believe this action to be necessary as we strive to preserve the maximum value of our enterprise. Our current understanding of the company’s enterprise value based upon the proposal submitted by our potential buyer, is that no amounts will be returned to any common or preferred shareholder.
Turney further stated: “It is our intent to continue serving our customers uninterrupted right through the 363 process; we have post petition financing in place and there is a pending offer from a potential buyer to acquire the assets of the company.”
Turney continued: “The bankruptcy filing is only related to the U.S.-based organizations. The international business of DRI, under DRI Europa AB, or more directly the Mobitec group of DRI subsidiaries, collectively represents about 65% of the total DRI Corporation revenue. Since the capital stock of DRI Europa AB is held by DRI, ultimately the entire company’s ownership will change, although the international Mobitec business should not be affected by the bankruptcy filing.”
In closing, Turney commented: “We also plan to seek the approval of the SEC to suspend reporting (including but not limited to reporting on forms 10K and 10Q, for example) and conducting the FY 2011 annual Audit, while we are in the 363 process. However, management does expect to file an 8K in the near future providing additional details regarding this matter.”