Bankruptcy Count Approves Sale of Nova Blue to ABC Imaging (Part 2)

This post is a brief follow-up to previous posts on this blog about Nova Blue Reprographics’ Chapter 11 Bankruptcy case.

Yesterday on Reprographics 101, we broke the news that the Bankruptcy Court, on December 6^th, 2011, approved the “as modified” Purchase & Sale Agreement that ABC Imaging and the Trustee agreed to regarding the sale of Nova Blue’s assets to ABC Imaging.

What we failed to mention is that there are two “Nova Blue” companies, Nova Blue, Inc. and Nova Blue Reprographics, Inc., and that the Purchase & Sale Agreement includes – and the $430,000 purchase price covers – both companies.

Because there are two “Nova Blue” entities in Bankruptcy, we incorrectly estimated “Nova Blue’s” Sales; this happened because we only looked at the “monthly operating reports” for Nova Blue Reprographics, Inc. and did not look at the monthly operating reports for Nova Blue, Inc.

The table below reflects Sales for both Nova Blue entities:

Sales Data	Nova Blue Reprographics, Inc.	Nova Blue, Inc.	Combined Sales
Jun-11	$122,028	$76,538	$198,566
Jul-11	$105,567	$78,051	$183,618
Aug-11	$139,017	$82,325	$221,342
Sep-11	$126,351	$50,611	$176,962
Oct-11	$121,916	$46,189	$168,105
Totals, 5 mo's	$614,879	$333,714	$948,593
# of months	5	5	5
avg. month	$122,976	$66,743	$189,719
To annualize	12	12	12
Estimated annual Sales	$1,475,710	$800,914	$2,276,623

It’s my understanding, from reading through various filings, that at least two of Nova Blue’s locations were closed, and I’m speaking about the locations that were down in rural Virginia. In addition, Nova Blue is not just in the reprographics services business, it is also in the business of selling/leasing and service reprographics equipment, providing equipment maintenance services and the sale of consumables and media. What I don’t know is how much of Nova Blue’s past sales were attributable to “reprographics services” provided by the locations that were closed, nor the amount of sales attributable to Nova Blue’s equipment, equipment service and consumables and media business. In spite of that lack of information, I’m going to take another “stab” at estimating the incremental annual sales revenues that ABC Imaging might likely pick up as a result of the acquisition of Nova Blue; my SWAG estimate is that ABC Imaging stands to pick up approximately $1.5 million in reprographics services sales and an additional $.5 million in equipment, equipment service and consumable and media sales – or, a total incremental annual sales gain of approximately $2.0 million. Of course, these are just estimates!

Purchase Price	$430,000	21.50%	% of Sales
Estimated annual sales	$2,000,000

So, based on my SWAG estimate, ABC Imaging’s purchase price for Nova Blue is equivalent to approximately 21.5% of sales. Note that, in a post we put up on the blog yesterday morning (about ARC and Service Point) ARC and Service Point are currently valued at 48.94% and 16.34% of sales, respectively. As I said in yesterday’s post about the Nova Blue/ABC Imaging deal, not too shabby a deal for ABC Imaging!

In yesterday’s post about the Nova Blue / ABC Imaging deal, I said that “even though the Bankruptcy Court has approved the deal, I don’t know if the deal has actually closed.” Two of my cousins and one family friend are bankruptcy attorneys. I should know at least something about bankruptcy law, huh? According to one of my sources, the Nova Blue / ABC Imaging deal won’t be final until the deal has passed a 15-day waiting period. The BK court approved the deal on December 6^th, and, when you add 15 days to that, that means that the deal will likely be final (in other words “a done deal”) on December 21^st or 22^nd.

Yesterday, I posted links to four documents associated with the Nova Blue / ABC Imaging deal. There’s some really interesting (and, to me, amusing) stuff in some of the documents; here’s just a few tidbits:

In the motion the Trustee submitted to the BK Court to approve ABC’s purchase offer, the Trustee said this …..

“Prior to the Petition Date, due primarily to the use of the Debtors as a personal piggy bank by their owner Richard Bartlett, the Debtors were operating at a significant loss, and all of their locations were either subject to foreclosure or were imminently approaching foreclosure. Since the Trustee has taken control of the Debtors, monthly losses have been eliminated, and the Debtors are now operating at a small monthly profit.”

And, the Trustee also said this …..

“The Debtors [Nova Blue, Inc. and Nova Blue Reprographics, Inc. (NBR)] are also in possession of certain property which has been titled in the name of Transpo, LLC or is purportedly owned by Ocean Blue of Kissimmee, Inc. These entities are either owned by or are under the control of Richard Bartlett. NBR paid for all of this property, and it was fraudulently transferred to these entities pre-petition by Mr. Bartlett. A list of the disputed property is attached hereto as Exhibit B. The Trustee asks that this Court make a determination as to the ownership of these assets at the sale hearing.”

Apparently, the Trustee received expressions of interest and/or offers from at least six different companies, but after considering those expressions of interest and/or offers, the Trustee said this …..

“The efforts of the Trustee have culminated in a purchase offer from ABC to acquire the Assets on the terms substantially set forth in the proposed Agreement for Purchase of Certain Business Assets (the “APA”) attached hereto as Exhibit A. The Trustee believes, in his reasonable business judgment, that the ABC offer is the highest and best offer available for the Assets and that the sale of the Assets to ABC is in the best interests of the Debtors and the creditors of the estates.”

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Okay, I don’t anticipate that we will be posting any further about the Nova Blue / ABC Imaging deal.