Velti modifies bid procedures, resolves objection, wins court approval

By Jim Witters

Wilmington, Del., Nov. 20 - Velti plc's U.S. operations won approval of bid procedures after resolving creditor objections by extending the timeline for the sale of its assets during a Nov. 20 hearing in the U.S. Bankruptcy Court for the District of Delaware.

Debtors attorney Richard A. Chesley said objections from the official committee of unsecured creditors were resolved by extending the sale process by about two weeks, establishing a cap for expense reimbursement to the stalking-horse bidder and granting consent rights to the committee.

Attorney Douglas M. Foley told the court that the committee is reserving its right to fully investigate the proposed financing and asset purchase agreement, as well as the lender and stalking-horse bidders, who are affiliates of GSO Capital Partners LP.

"The need for speed in this sale is built around the concept of a melting ice cube - that the value of this business is deteriorating - and I am not convinced of that," Foley told the court.

Stalking-horse bid

As previously reported, some GSO entities purchased 100% of the pre-bankruptcy debt secured by assets of the Velti debtors and various non-debtor obligors at a deep discount just days before the company filed bankruptcy.

The Velti debtors also seek approval to sell substantially all of their assets to another GSO affiliate, with the proposed sale consideration to be funded by the stalking-horse bidder's credit bid of the rolled-up debt under the pre-bankruptcy credit facility and the debtor-in-possession financing.

The proposed transaction includes the sale of business lines operated by Velti Inc. and Air2Web in the United States, Air2Web India, and Velti DR Ltd. and Mobile Interactive Group, Ltd. in the United Kingdom.

Bid procedures

The GSO affiliates' stalking-horse bid includes the assumption of liabilities, a $26.25 million reduction in the total amounts outstanding under Velti's debtor-in-possession financing agreement, a $3.75 million reduction of the total amount outstanding under a pre-bankruptcy credit agreement and $1.25 million in cash for payment of cure costs for assumed executory contracts and other costs and expenses.

Competing bids are due by Dec. 16.

An auction, if necessary, will be conducted on Dec. 18.

The sale hearing is scheduled for 11 a.m. ET on Dec. 20.

Competing bids must meet or exceed a cash amount equal to the sum of the DIP credit bid and the pre-bankruptcy credit bid, plus up to $750,000 in expense reimbursements to the stalking-horse bidder and $1 million.

Chesley said the overbid amount was reduced by $1 million at the request of the creditors committee.

London-based Velti provides mobile software platforms, applications and services for operators and advertising agencies in southeastern Europe, the United Kingdom and the United States. The U.S. operations filed for bankruptcy on Nov. 4 under Chapter 11 case number 13-12878.

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