This post is a brief follow-up to previous posts on this blog about Nova Blue Reprographics’ Chapter 11 Bankruptcy case.
On Friday, October 14th, 2011, we did an “update” post on Nova Blue’s Chapter 11 Bankruptcy matter, and, at the beginning of that day’s post, we said this…..
“First, I want to mention that I would not be surprised, one bit, if one of the larger DC-area reprographics companies makes an offer to purchase the assets (and goodwill and customer list) of Nova Blue Reprographics and, subsequently, completes that offer, which would require the consent of the Trustee of this case as well as approval from the Bankruptcy court. Given the competitive landscape in the reprographics industry in the Washington, DC Metro area, I would think that ABC Imaging would take a look at acquiring Nova Blue Repro, and I think that would apply to ARC as well. And, maybe NRI would have an interest in looking at Nova Blue Repro. My own personal opinion is that, if Nova Blue Repro is acquired, the most likely acquirer would be ABC Imaging.”
If you want to look back at the complete post we did on October 14th, you can find that post at this link:
Okay, now for a “flash update” – Breaking News!!!
While I do not know if ABC Imaging has, by now, actually completed the purchase of Nova Blue (meaning, completed the purchase of the assets of Nova Blue, Inc. and Nova Blue Reprographics, Inc.), I do know, by virtue of a filing associated with Nova Blue’s BK case, that the Bankruptcy Court Judge did, on December 6th, approve the “as modified” Purchase & Sale Agreement, which was originally filed with the BK court on November 4th, 2011.
After Nova Blue went into Chapter 11, the court appointed a “Trustee” to operate Nova Blue, meaning that Nova Blue’s long-time owner, Dick Bartlett, was, apparently, no longer the “principal operator” of Nova Blue after the Trustee was appointed.
On November 4th, the Trustee submitted a motion to the BK court, “moving” to sell Nova Blue (its assets) pursuant to a Purchase & Sale Agreement submitted by ABC Imaging. Subsequent to that motion, three objections were filed. But, subsequent to that, the objections were either satisfied or overruled. The Purchase & Sale Agreement was somewhat modified, and it is the “modified” Agreement that was approved by the BK Court Judge on December 6th.
At the conclusion of today’s post, I’m going to post the Purchase & Sale Agreement documents I was able to download, but please note that the documents I’m going to provide you links to are the P&SA as originally proposed. I think the modifications to the initial agreement were minor, or, as some might put it, inconsequential.
What did the BK Court approve? - - - well, here it is …..
The sale of Nova Blue’s assets for a purchase price of $430,000 CASH (per the “modified” agreement.) Nice to know that a reprographer has that much cash sitting around!
Under the P&SA, what does ABC Imaging get for its $430,000? - - - well …..
1) Nova Blue’s assets, free and clear of any encumbrances.
2) The right to assume the leases on Nova Blue’s locations (I’m not sure which locations are involved or how many there are; I think there are two locations involved).
3) A business generating this much in sales (these sales numbers come from the “Monthly Operating Reports” filed with the BK Court over the last few months):
Jun 2011 $122,028
Jul 2011 $105,567
Aug 2011 $139,017
Sep 2011 $126,351
Oct 2011 $121,916
Okay, if we do a simply “annualization” of these sales numbers, that means that ABC Imaging will likely (or hopes to) pick up approximately $1.45 million in sales for the purchase price of $430,000. At a purchase price of $430,000, ABC would be paying a price of approximately 29% of sales. Note that, in a post we put up on the blog, this morning, about ARC and Service Point, those companies are currently valued at 48.94% and 16.34% of sales, respectively.
Let’s take another stab at evaluating the $430,000 purchase price. If ABC does pick up $1.475 million in incremental annual sales and is able to earn a 15% profit on those incremental sales, or approximately $221,000 in incremental net income, that outcome would yield ABC Imaging an ROI (annual return on investment) of approximately 51% on its $430,000 investment. Not too shabby, huh?!
Again, while I do know that the BK Court approved the deal that ABC Imaging and the Trustee negotiated, I do not know if ABC has actually completed the deal. I have contacted an officer of ABC Imaging for comment, and I’ll let you know, by later post, what I hear.
These documents are now posted in my Google Docs library (click on links provided to access the documents) (please note, these were the documents filed with the BK Count on November 4th; these documents may have been subsequently modified!):
- TRUSTEE’S MOTION FOR ORDER (A)AUTHORIZING AND APPROVING ASSET PURCHASE AGREEMENT; (B) AUTHORIZING THE SALE OF ASSETS OF THE ESTATE, FREE AND CLEAR OF CERTAIN LIENS, CLAIMS, INTERESTS AND ENCUMBRANCES; AND (C) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
- AGREEMENT FOR PURCHASE OF CERTAIN BUSINESS ASSETS
- LETTER TO THE BANKRUPTCY TRUSTEE FROM DICK BARTLETT (this is a very interesting letter!)
- PROPOSED COVENANT NOT TO COMPETE
Finally, I’d like to say……
a) if ABC actually completes the deal, best wishes to Medi and ABC Imaging for success with the deal
b) to Dick Bartlett, best wishes for good health and happiness
Source of documents: pacer.gov