Under the terms of the deal, Alpharetta, Georgia-based Datatec intends to reorganize under the Federal Bankruptcy Code, and investment group Eagle Acquisition Partners will then aim to purchase all of the assets of Datatec by bidding its debt in a sale of Datatec’s assets.
Eagle Partners, which is an investment group made up of investors including Datatec’s CEO Raul Pupo and managing director Vern Holden, has acquired all of Datatec’s secured debt held by its creditors IBM Credit LLC and The Palladin Group. Datatec obtained debtor-in-possession financing from Alpine Associates worth some $2.5 million to fund on-going activities during the re-organization.
As part of the management buy-out plans, Pupo and Holden resigned from Datatec, and board director William J Adams will serve as interim CEO.
The bankruptcy is the culmination of months of turmoil at Datatec. In December 2003, CEO Issac Gaon quit the company along with independent board member Mark Berenblut. Gaon was then replaced by Raul Pupo. The company then said it retracted its previously announced earnings estimates and instead expected a net loss for the second quarter of fiscal 2004 ending October 31, 2003, as well as an overall net loss for fiscal 2004.
In March 2004, it said this quarterly loss would be substantially greater than previously announced estimate of $10 million. That month it also brought in new CFO Rod Dorsey and replaced auditor Deloitte & Touche with Eisner LLP.
Datatec has failed to file a quarterly report with the SEC since its first fiscal quarter of 2004, the three-month period to July 31, 2003.
