LodgeNet Interactive Corp. (LNET: Quote) said Tuesday that it has launched a process to explore and evaluate potential refinancing alternatives and other strategic alternatives. The company has retained Miller Buckfire & Co. to assist it in the process, while also retaining FTI Consulting to assist in developing its business plan.
"We believe the retention of Miller Buckfire and FTI Consulting comes at an opportune time for LodgeNet. Their activities will support our ongoing efforts to streamline our operations, improve customer satisfaction, and to stabilize our room base and revenues," Interim President and CEO Phillip Spencer said in a statement.
New York-based Miller Buckfire is an investment banking and capital markets firm, while FTI Consulting is an operations and financial advisory firm with significant experience in media and hospitality industries.
Sioux Falls, South Dakota-based LodgeNet is a provider of cable TV, on-demand movies, Nintendo video games and Internet services to hotels and hospitals as well as their consumers.
The company is explore refinancing alternatives for its senior secured credit facility to address its upcoming debt maturities and tightening financial covenants.
"The involvement of these industry-leading firms will assist us in the evaluation and negotiation of various financial proposals as well as confirmation and optimization of our business planning efforts," CFO Frank Elsenbast stated.
"While we continue to explore ways to reduce debt, LodgeNet's base business is generating significant free cash flow, and as of August 21st, we have more than $27 million of liquidity available to support the business," Elsenbast added.
During the second quarter, the company reduced debt by $19 million to $329 million.
The company has been reporting consecutive quarterly losses for the past three quarter's, with the latest second quarter loss widening sharply to $103.1 million or $4.08 per share from $4.4 million or $0.17 per share last year. Excluding charges, net loss would have been $9.1 million or $0.36 per share. Quarterly revenue declined 13 percent to $92.8 million from last year.
He company said that it faces a number of challenges in regard to Guest Entertainment performance and room churn, both of which continue to impact its financial performance. The company also then decided to withdraw its financial guidance for 2012.
In May, the company also made a few top management changes, which saw long time President and CEO Scott Petersen departing from the company, effective June 15, while remaining on the company's board. The company then named Director Phillip Spencer as interim President and CEO, pending an executive search.
He company had in early May appointed Douglas Bradbury, an independent director of the Company since 1999, as chairman of the board. The followed the separation of the roles of chairman and CEO. Until then, Petersen was also the chairman of the board.
LodgeNet was founded in 1980 as Satellite Movie Co., which was renamed as LodgeNet Entertainment Corp. in 1991, and became a publicly traded corporation in 1993. LodgeNet then again changed its name to LodgeNet Interactive Corp. in 2008 after a spree of acquisitions.
In Tuesday's regular trading session, LNET is currently trading at $0.42, down $0.06 or 12.50% on a volume of 0.11 million shares.
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by RTT Staff Writer
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