The chief executive and majority shareholder of Ultimate Electronics Inc. may make a play for the bankrupt retailer’s assets.
In a regulatory filing Thursday, Mark Wattles revealed he is in discussions with the company’s unsecured creditors committee. If they agree, an entity controlled by Wattles would be likely to bid on “all or substantially all’ of the retailer’s inventory and leases on certain stores.
The deal may include cash, promissory notes, debt or stock. The creditors had not yet agreed to such a deal, Wattles said.
His disclosure came the same day the 62-store, Thornton-based electronics retailer, which operates locally as SoundTrack, was to begin auctioning off some of its stores and goods.
The auction is to test whether liquidation of some or all of its stores would provide more money to creditors than restructuring. The company listed debts of $160 million when it filed for bankruptcy in January.
The winning bid is to be presented Tuesday before a bankruptcy judge in Delaware.
Company representatives, attorneys and representatives of the New York law firm hosting the auction did not return messages Thursday.
Fifty-four potential bidders for the company were identified in court filings, although a handful of those companies told The Denver Post they weren’t participating.
One liquidator backed out because he expected the price to be too high. Another representative of an equity investment firm said he received bidding materials but wasn’t interested.
The potential bidder-list named liquidators, investment firms and competing retailers, including Best Buy, Circuit City and CompUSA.
Ultimate’s attorneys had previously left open the option that the company would secure financing for continued operations by Tuesday’s hearing but acknowledged that was unlikely.
Earlier this week, Ultimate moved to deregister its stock, which is currently traded on the so-called pink sheets. Ultimate stock traded for nine cents per share Thursday.
Wattles, former head of Hollywood Entertainment Corp., emerged as an apparent savior for Ultimate when it filed for Chapter 11 bankruptcy in January. He put up $4.4 million to buy shares of the company and committed $5.6 million in debtor-in-possession financing. He later made himself CEO of the company.
Later, when attorneys announced liquidation plans, they told a judge that nobody – including Wattles – was wiling to commit to financing the company as a going concern.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
