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Revised Offer for Gen Con

Ups the Ante

Published: 01/06/2009, Last Updated: 01/08/2009 10:49am

A new offer from the mysterious Gen Con Acquisition Group (now a Delaware LLC) for the assets of Gen Con LLC has been filed with the bankruptcy court handling Gen Con’s Chapter 11 bankruptcy, along with objections to Gen Con’s Amended Plan of Reorganization from the GAG and Lucasfilm.  GAG has also become a creditor of Gen Con through the acquisition of the $31,000 claim of LGC Associates, a search firm.

 

The offer, which expires this Friday, offers to fund the entire balances due Gen Con’s creditors (some $3.8+ million) with new funds from outside Gen Con, with $1.4 million guaranteed by closing in the form of a $900,000 escrow amount and a $500,000 letter of credit. 

 

There is no financing contingency; according to the offer, GAG “has secured funding for the acquisition.” 

 

The guaranteed portion is an increase over the previous offer (see “Eleventh Hour Offer for Gen Con”).   GAG also added a provision which allows creditors to cash out immediately for a 70% payout, rather than waiting for the remainder of the scheduled payments.  The schedule provides for payment over about four years, with initial payments of around 23% of the balances and bi-annual payments following. 

 

Gen Con’s Plan also provides for bi-annual payments to creditors, but both the upfront and scheduled payments are smaller than GAG’s, and would be funded from internally generated cash flow. 

 

Gen Con CEO Adrian Swartout explicitly rejected GAG’s previous offer (see “Gen Con’s Adrian Swartout on New Offer”).  Former GAMA Executive Director Anthony Gallela revealed that he is involved in GAG, and that the company is interested in retaining Swartout if their offer is successful (see “Gallela Ungagged”).  The GAG’s offer also contemplates keeping other Gen Con employees. 

 

One other significant difference between the two plans is that Gen Con Acquisition Group is not contesting a portion of the Lucasfilm claim; Gen Con is.

 

That’s one reason listed in Lucasfilm’s filed objection to Gen Con’s Plan.  Among other reasons, both Lucasfilm’s and GAG’s objections note that Gen Con’s financial projections do not show the company generating sufficient cash to meet the proposed payment schedule to creditors.  And GAG’s objection makes much of the relationship between Gen Con and Hidden City Games and Off the Grid, arguing that large transactions prior to the filing of the bankruptcy could be the subject of claims (insider transactions within a year prior to a bankruptcy receive special scrutiny), and that Gen Con was relinquishing the rights to those claims for insufficient consideration (subordination of its debt to Hidden City Games to other bankruptcy claims). 

 

A hearing is scheduled for Friday to consider the Plan of Reorganization. 

 
 
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