Friday, June 15, 2007

The buyout/LBO-boom has just witnessed its first major casualty....

Ronco, Maker of the Veg-O-Matic, Files for Bankruptcy (Update2)
2007-06-15 13:05 (New York)

(Adds sale of company in third paragraph.)
By Jeff St.Onge
June 15 (Bloomberg) -- Ronco Corp., maker of the Veg-O-Matic
vegetable slicer and Pocket Fisherman, filed for bankruptcy two
years after founder and television pitchman Ron Popeil sold the
Ronco, which marketed products as perfect for ``grads and
dads,'' sought protection from creditors owed more than $32.7
million. It listed $13.9 million in assets in papers filed
yesterday in U.S. bankruptcy court in Woodland Hills, California.
A sale of Ronco ``in the coming weeks is the best and most
viable mechanism for preserving'' the company's value, Chief
Executive Officer John S. Reiland said in the bankruptcy filing.
Reiland said Ronco will be sold through a court-supervised
auction and already has a potential buyer.
Popeil, 72, started the Chatsworth, California-based company
in 1958 and became a household name by hawking products in late-
night television ads. He was known for infomercials selling his
products, and got his start pitching his father's Veg-O-Matic
manual food processor with the phrase: ``It slices! It dices!''
Ronco was sold by Popeil to a holding company, Fi-Tek VII,
in June 2005, according to court papers. The buyer kept the Ronco
name and the right to purchase products Popeil invents before
they are offered elsewhere. He continues to work for Ronco as a
consultant and spokesman.
`But wait, there's more'
Popeil Inventions, owed more than $11.7 million, and other
companies owned by Popeil are listed in court papers as Ronco's
largest creditors. His inventions include a machine that
scrambles eggs inside the shell, a food dehydrator, an automatic
pasta-maker and a spray to cover bald spots on people's heads.
Among the company's best-selling gadgets is the Pocket
Fisherman, a compact rod and reel.
Popeil is listed as an inventor on more than two dozen U.S.
patents, according to the U.S. Patent and Trademark Office. His
fast-paced TV ads added phrases to the lexicon, such as ``But
wait, there's more'' and ``four easy payments.''
Popeil placed Ronco under bankruptcy court protection in
February 1984, and the company stopped doing business until he
resurrected the business with a former company salesman.
Fi-Tek VII's buyout in 2005 left Ronco with about $250,000
cash, Reiland said in court papers. The cash ``problem was
compounded by the fact that Ronco was entering the period where
it required significant working capital in order to acquire
inventory for the busy holiday season,'' he said.
`Wow, That's Terrific Bass!'
Stacia Neeley, Ronco's bankruptcy lawyer, didn't return a
call seeking comment. Popeil didn't return a message left with
his assistant.
In August, Ronco fired President and Chief Executive Officer
Richard Allen. He was replaced by Reiland, who first joined the
company in June 2005, according to court papers.
Ronco shares, which peaked at $2.60 in June 2006, almost
doubled, jumping 6 cents to 13 cents at 9:30 a.m. in over-the-
counter Bulletin Board trading.
Ronco's television ads were so familiar to viewers that they
were spoofed by comedian Dan Aykroyd in a famous 1976 sketch on
the television program ``Saturday Night Live.'' In the sketch,
Aykroyd advertises the ``Super Bass-O-Matic '76'' by ``Rovco,'' a
blender that turns a whole fish into a brown liquid, which is
then drunk by Laraine Newman, who co-starred in the segment.
``Wow, that's terrific bass!'' she says.
The case is In re Ronco Corp., 07-12000, U.S. Bankruptcy
Court for the Central District of California (San Fernando
--With reporting by Anthony Aarons in London, Susan Decker in
Washington and Bob Van Voris in New York. Editor: Rovella