Industry rivals who have been waiting to get a piece of
finally have their shot, as assets of the bankrupt file-swapping service went up for auction Friday.
Napster’s creditors are asking for US$25 million for the defunct service in an auction due to be held on Aug. 27. The bid deadline is Aug. 21.
The auction is being conducted by Trenwith Securities LLC, a wholly owned subsidiary of BDO Seidman LLP, with headquarters in Costa Mesa, California. Napster’s creditors hired Trenwith on Aug. 1 to drum up interest in the auction, which is being held as part of Napster’s Chapter 11 bankruptcy filing.
Napster filed for bankruptcy in June, two weeks after its major creditor, German media group Bertelsmann AG, agreed to purchase the beleaguered service for US$8 million, after sinking close to $100 million worth of loans and other financing into the company.
Bertelsmann is expected to be the highest bidder in the auction, as it guns to use Napster to launch an online music subscription service. The German conglomerate has already said it will bid $9 million over the asking price. What’s more, Bertelsmann is offering to waive some $90 million in loans, plus an additional $5.1 million in debitor-in -possession credit it extended to keep Napster afloat, making its final bid worth over $100 million, according to Rick Chance, managing director of Investment Banking at Trenwith.
Despite Bertelsmann’s hefty bid, Trenwith is casting a wide net for the Redwood City, California, company’s assets, internationally and to a variety of industries, Chance said.
“What makes this engagement challenging is that it has a very wide distribution,” he said. Adding to the challenge is that the securities firm only has eight business days to generate interest in the auction.
“It’s a very accelerated, very intense process,” Chance said.
To woo potential investors, the firm is advertising the large growth opportunities predicted for online music subscription services, as well as Napster’s leading brand name strong management team.