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By PAMELA C. TURFA pamt@leader.net
Thursday, March 06, 2003 Page: 1C
WHITE HAVEN – Emcee Broadcast Products has closed and filed for bankruptcy,
ending months of efforts to turn around the financially troubled broadcast
transmission equipment manufacturing firm.
A dispute with a major creditor, First Federal Bank of Hazleton, about
EMCEE’s ability to make monthly loan payments forced the closing, company
officials reported in a document filed with the U.S. Securities and Exchange
Commission.
A bankruptcy court trustee said he is reviewing the books to determine
whether to ask the court for permission to reopen and sell EMCEE as an
operating company or leave it closed and sell the property and assets.
On Jan. 23, EMCEE laid off two dozen employees – most of its work force –
and stopped most work.
Company President Richard Nardone blamed the shutdown on slow payment by
customers and compared it to a temporary vacation shutdown.
Since then:
On Jan. 27, First Federal Bank declared the company was in default under
its loan agreements and seized its accounts. That action forced the company to
cease business operations, according to the SEC filing.
Bankruptcy trustee William G. Schwab, a Lehighton attorney, said he has
been told the company owes $1.9 million to First Federal.
Nardone said EMCEE had about $140,000 in its accounts and had agreed to pay
First Federal $25,000 per month. He disputes the company was in default and
said First Federal failed to meet default notification requirements of the
loan agreement.
First Federal Bank officials, through a spokesman, declined comment.
Two officers – John Saul, vice president, and Joan Pecora, controller and
chief financial officer – resigned.
Directors Michael J. Leib and Randall P. Marx resigned. Leib is a director
of First Federal Bank and resigned because of a conflict of interest. Marx’s
resignation was unrelated to the bank’s action, according to the SEC filing.
In late January, the bank stopped honoring EMCEE Broadcast’s checks,
Nardone said.
On Feb. 24, the company filed voluntary Chapter 7 bankruptcy in the U.S.
Bankruptcy Court for the Middle District of Pennsylvania.
Schwab said he has begun an independent investigation of the company and
its financial records.
A bankruptcy hot line and a Web site have been set up to provide the public
with information on EMCEE’s bankruptcy. The hot line is through Schwab’s
office, (610) 377-5200. The Web site is www.uslawcenter.com/trustee.
Schwab said he will update the Web site periodically. Tomorrow, for
example, he will travel to Kentucky to visit an EMCEE manufacturing facility.
Creditors may file proof of claim with his office. Customers who need to
pick up repair orders and potential buyers also should contact his office.
Schwab also is negotiating with secured creditors – such as the bank – to
carve out some assets for unsecured creditors. Secured creditors are first in
line to be paid.
Shareholders, who have seen the value of their stock plunge from almost $15
to pennies per share, are at the bottom of the priority list, he said.
EMCEE’s stock was taken off the Nasdaq main stocks listing in November
after trading at less than $1 per share for several weeks. It now is sold over
the counter.
Late last year, company officials said they were discussing the sale of
EMCEE Broadcast, which manufactures broadcast transmission equipment, with
several potential buyers.
“I am aware that a number of people have expressed interest in purchasing
the company,” Schwab said.
He could not speculate on a time frame for making a decision about a sale
of the company.
“If everything is very clear and very above board, we might start
negotiating to sell the business in the next week or so,” he said. Any
confusion in the financial records might delay those talks.
Nardone said company officials were blindsided by First Federal’s Jan. 27
action.
“Our inability to have access to operating funds prevented us from meeting
payrolls, buying services and supplies, running the business,” he said.
“They effectively forced the Chapter 7 filing.”
“There’s a business that’s not in business,” Nardone said of EMCEE
Broadcast. “It’s a technology company – (the kind) that this community
supposedly wants to attract.
“I don’t know why they pulled the plug. To this day, we don’t know why
they pulled the plug.”
Pamela C. Turfa, a Times Leader staff writer, may be reached at 829-7177.