Delphi granted court approval of $11.2 million MobileAria asset sale to Wireless Matrix

By Jennifer Lanning Drey

Eugene, Ore., July 24 - Delphi Corp. obtained court approval to sell the assets of MobileAria, Inc. to stalking horse bidder Wireless Matrix USA, Inc. for $11.2 million, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Under the terms of the agreement and the bidding procedures, MobileAria will credit Wireless Matrix $195,000 against the $11.2 million cash consideration to be provided to MobileAria at closing.

In addition, $975,000 of the purchase price will be placed into an escrow account to satisfy MobileAria's indemnification obligations.

The remaining available funds from the escrow will be released on the first anniversary of the sale closing provided, however, that if the buyer has made an indemnification claim before then, the escrow agent will continue to hold that amount until the claim is resolved.

Wireless Matrix will also assume a controversial contract with Verizon under the sale.

According to the motion, Verizon has asserted that MobileAria is still responsible for $700,000 of charges and liabilities associated with alleged errors that may have resulted in inaccurate billings to Verizon.

Under the terms of the sale, any amounts paid by MobileAria with respect to the dispute with be credited to the $700,000, and MobileAria and Verizon will work in good faith during the next 60 days to resolve the matters.

Wireless Matrix will not be liable to Verizon for the $700,000, according to the motion.

Also under the agreement, MobileAria will be responsible for up to $1 million of pre-closing defaults with Verizon not known on the sale closing date.

In addition, MobileAria will put $100,000 in an escrow account to cover repairs and other work due under the Verizon contract.

According to a previous motion, Delphi believes that MobileAria is a fundamentally strong business in an emerging and rapidly growing market, but does not feel its business fits in the company's anticipated product portfolio under its transformation plan.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005. Its Chapter 11 case number is 05-44481.

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