IT trade show company Key3Media Group Inc. filed for Chapter 11 bankruptcy protection on Tuesday as it undergoes financial reorganization. However, it said that all of its conferences and shows, including Comdex Fall 2003, will proceed this year as planned.
In an announcement, the Los Angeles-based company said its reorganization plan will allow it to reduce its debt by 87 percent, from approximately US$372 million to $50 million, while eliminating all of its existing preferred stock and common equity. The plan will cut the company's annual interest expenses from approximately $38 million to $3.4 million.
The company said it had run into financial difficulties because of the downturn in the tech economy and the aftershocks from the terrorist attacks in September 2001.
Private equity fund company Thomas Weisel Capital Partners is providing Key3Media with $30 million in debtor-in-possession financing and has also agreed to provide money for the company as the reorganization continues.
Key3Media said it will continue its business operations and will retain its existing management team throughout the reorganization. The Chapter 11 plan was filed in U.S. Bankruptcy Court for the District of Delaware.
The trade show company said its shows and conferences will take place as scheduled, including Comdex Fall, scheduled for Nov. 15 to 20 in Las Vegas; NetWorld+Interop, from April 27 to May 2, also in Las Vegas; and JavaOne San Francisco, from June 9 to 13.
"This comprehensive plan is designed to put Key3Media back on track to long-term financial health while giving us the capital strength and operating flexibility we need to hold all of our scheduled trade shows and conferences," Fredric D. Rosen, Key3Media's chairman and CEO, said in a statement. "Our clients will now be able to sign up for NetWorld+Interop, Comdex and our other shows with full confidence."
Lawrence B. Sorrel, managing partner of Thomas Weisel Capital Partners and director of private equity at Thomas Weisel Partners, said Key3Media is a "fundamentally sound company that has been hurt by its capital structure and the declines in the IT and networking industries.
"We intend to work closely with the board, management and Key3Media's talented workforce to help the company execute a successful turnaround," he said in a statement.
Just a day after Key3Media's bankruptcy filing, a rival company announced that it will hold its own fall IT show in Las Vegas at the same time as the Comdex show.
Jupitermedia Corp. said today that it will hold its first Computer Digital Expo this fall. The show, America's 21st Century Information Technology Conference & Expo, will run Nov. 17 to 21 at the Mandalay Bay Convention Center and hotel campus.
Alan Meckler, chairman and CEO of Jupitermedia, said today that his company's new show is being planned because Key3Media's bankruptcy leaves question marks about the future.
"Nobody can definitively say one way or another" that Key3Media will in the end come out of its financial problems and still be able to hold shows such as Comdex in November, he said. Potential exhibitors have questions about its viability: "When you have a company in bankruptcy ... would you really send your money in for a space?" he said. "This is a very fragile situation."
Jupitermedia decided to go ahead with its plans for another show that same week to be able to fill in any gaps. "I like a good fight," Meckler said. "And if I don't make it, I don't make it."