LodgeNet said it filed for bankruptcy protection, but that new capital and a partnership with rival DirecTV (Nasdaq: DTV) will see it emerge from the prepackaged chapter 11 filing with the ability to launch new products for its hotel and healthcare customers.
It's been a rough year for LodgeNet, which has seen its revenue and stock price plummet, as consumers are spending less money on pay-per-view movies and porn titles in hotels wired with its interactive entertainment system. It faces increased competition from the Internet and DirecTV, which has been striking deals with hotel chains to deliver its satellite TV programming to customers.
LodgeNet announced earlier this month the resignation of CEO Rich Battista, a former Gemstar and Fox Cable Networks executive who had just joined the company in September. Nasdaq delisted LodgeNet's stock on Jan. 14, after its shares traded below $1 for 30 consecutive days. LodgeNet had disclosed in September that Nasdaq warned it that the company didn't meet its listing requirement, since its market cap had dropped below $15 million.
But LodgeNet said Monday that its "operations will continue in the normal course," thanks to a $60 million investment from Colony Capital. LodgeNet said Colony, which will become its majority shareholder, signed a memorandum of understanding with DirecTV that will see the companies form a technology and marketing partnership.
"Thanks to the overwhelming support we've received from our lenders and suppliers, and with the solid commitment of Colony Capital and an expanded strategic partnership with DirecTV, we anticipate being able to complete this process on an expedited basis, and to emerge with the capacity to launch new and exciting products which will benefit both our hospitality and healthcare customers," new LodgeNet co-CEOs Frank Elsenbast and James Naro said in a prepared statement.
LodgeNet said it expects it will complete the chapter 11 reorganization within 60 days.
- see the release
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