Thomson Puts Grass Valley Up For Sale

Thomson is
putting Grass Valley up for sale, according to
multiple reports, including Television
Broadcast. The Parisian tech giant said the board approved divesting the
division, along with its Premier Retail Networks (PRN) digital-signage business.
Thomson has received “expressions of interest” in the business units, wire
reports indicate.

Thomson
announced the move Thursday morning as it warned of breaching loan
covenants. Some of the company’s private placements require that debt not
exceed net worth.

“Based on preliminary unaudited data, it is likely that, when the 2008 audited
consolidated financial statements are completed and available, at the latest, by
the end of April 2009, this covenant will be breached.” Thomson’s press release
stated.

Thomson estimated its debt to be nearly $2.8 billion. It had a little over $1
million in cash at the end of the year, money it drew down from the balance
remaining on its syndicated credit facility. Market cap in France was
around $463 million this morning, with shares trading at $1.42 after tumbling 15% on the news.

A covenant breach could trigger other creditors to demand early repayment,
Thomson said. The company hired financial advisers Perella Weinberg Partners and
Ph. Villin Conseil and law firm Davis Polk & Wardwell to help it
negotiate with creditors. It’s also seeking assistance from the French
government.

“At this stage, it is not possible to predict the outcome of these upcoming
discussions,” Thomson’s statement read.

Together, Grass Valley and PRN generated $1.3 billion in sales last year, about 20% of Thomson’s revenues.

PRN was acquired by Thomson for $285 million in 2005. The company does digital
signage for such companies as Wal-Mart. Thomson purchased Grass Valley from Terry
Gooding of San Diego in 2002 for an undisclosed sum.
Thomson sold the Grass
Valley digital-film transfer-gear business to private-equity investors last October, also for an
undisclosed price.

Based on preliminary estimates, Thomson said it expects to post revenues of
$6.4 billion for fourth quarter 2008, a decrease of 12.7% from the previous year at current exchange rates and 7.7% on a constant-currency basis.