rVue’s Financial Struggles Force Sale By Month’s End
May 11, 2017 by Dave Haynes
It’s been a few years, really, since rVue has had much of a noticeable presence in the digital OOH space, and it appears those years have been pretty scratchy.
The company has announced it has received a notice of default and payment demand from a key backer, and that it will be up for sale by the end of the month. The Florida company’s CEO concedes in a press release revenues have not been there and that it has effectively gone dark – which I’m going to guess means ops are on life support, if that.
rVue was one of the early companies involved in the push to roll up multiple, different digital OOH aka place-based, networks under one buying and selling platform. rVue Holdings, Inc. is described as “an advertising technology company providing the digital distribution platform for the Digital Place-Based Advertising industry. The Company connects approximately one million digital screens across 175 networks delivering access to 250 million daily impressions in one simple platform.”
The last I wrote about these guys was almost four years ago. When they started there was SeeSaw, Adcentricity and rVue. The first two are long gone and rVue is sputtering. Through the years the lines have blurred between online and out of home and there are many buying platforms out there, including ones run by software companies like BroadSign.
From the press release:
Financial Status of the Company
The Company has continued to experience severe difficulties in executing on its business plan and securing debt or equity financing beyond the equity financing provided by Roche Enterprises during late 2015 and in 2016, and the Roche Notes, notwithstanding management’s efforts to secure it. Given that Roche Enterprises has declined to offer additional financing beyond the proceeds of Roche Note 3, and in light of the Company’s difficulty in securing additional financing, the Company’s management has concluded that the Company’s continued operation of the rVue business beyond the end of May 2017 is not feasible.
Notice of Default and Demand for Payment
On May 3, 2017, the Company received a notice of default and demand for payment (the “default notice”) from Roche Enterprises, (a) stating that the Company was in default under the Roche Loans, and (b) demanding payment in full of the Roche Loans, with a total amount due to Roche Enterprises of $460,558.73 as of the date of the default notice, inclusive of accrued interest, attorney’s fees and expenses (the “Secured Debt”). The default notice further stated that Roche Enterprises intends, if the Company is unable to pay in full its obligations under the Roche Notes, to foreclose upon and sell the Company’s assets, and to pursue other remedies available to it, under the Uniform Commercial Code and other applicable law.
Company Response
The Board held a special meeting on May 3, 2017 to discuss the default notice. All directors participated, including Mr. Roche. It is the Company’s current understanding that Roche Enterprises intends to conduct a public UCC sale of the Company’s assets, on or about May 31, 2017, after first publishing notice thereof in appropriate trade publications, and that at that sale, Roche Enterprises intends to bid the entire amount of the Secured Debt for such assets. If there is no higher bidder, then Roche Enterprises would obtain title to the Company’s assets in return for cancellation of the Secured Debt, and there would be no remaining proceeds for distribution to the Company’s shareholders. If there is a higher bidder, then such bidder would obtain title to the Company’s assets, pay the Secured Debt to Roche Enterprises, and any remaining proceeds, net of sale expenses, would be available for distribution to the Company’s shareholders. The Company further understands that if Roche Enterprises is the successful bidder, it intends to continue the rVue brand and business as its sole owner.
The Company’s Board of Directors (the “Board”) convened a special meeting on May 3, 2017 to review the notice of default and its impact on the future direction of the Company. At that meeting, the Board discussed a variety of issues, including (a) the implications for the Company and the shareholders of the notice of default and the likely resulting foreclosure, (b) the feasibility of raising the funds required to repay the Secured Debt prior to the likely foreclosure sale, whether by selling assets to, or by obtaining new financing from, a third party, (c) the likely net proceeds of a sale of the Company to a third party after taking into account (i) ranges of value provided by business brokers familiar with the industry, and (ii) marketing and sale processes and expenses as outlined by counsel and by restructuring consultants consulted by the Company, (c) the feasibility of alternatives that might permit the preservation of shareholder value, and (d) whether or not Roche Enterprises, in its capacity as the Company’s majority shareholder, and Mr. Roche, in his capacity as a director, would be supportive of such alternatives, if available.
The Board continues to consider these matters and to engage in discussions with Roche Enterprises. However, at this time, the Board believes it unlikely that the Company has any viable means to stop the foreclosure sale, in which all remaining shareholder value is likely to be lost. The Board remains vigilant for means of potentially preserving shareholder value, but can provide no assurance in this regard.
The Company’s CEO, Mark Pacchini, had this to say about the situation: “We are disappointed by Roche Enterprises’ decision to foreclose on the notes, but the board of directors and I fully understand the business reasons for such a move. Robert Roche and Roche Enterprises have been rVue’s biggest advocates. We greatly appreciate them and all investors for their capital contributions, patience and support. The rVue team has worked diligently to keep costs in line with revenue, including the decision to go dark. And we’ve explored various new business strategies and sought other reasonable methods of financing, but we recognize the company can no longer continue to operate under its current revenue stream and in its current form.”
…where are the Borg when you need them… 🙂