TallyGenicom files bankruptcy to complete sale of some U.S. assets

By Caroline Salls

Pittsburgh, Jan. 27 - TallyGenicom, LP filed for Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the District of Delaware to complete the proposed sale of some of its U.S.-based assets.

"The economic recession in the U.S. and global downturn along with tight credit markets worldwide has had a serious impact on TallyGenicom and on many of our customers which in turn affects their purchase of equipment such as ours," TallyGenicom chief executive officer Dan Adragna said in the release.

According to a company news release, Printronix Inc. has been selected as the lead bidder for the assets. Printronix has offered to pay $36.63 million for the assets.

If Printronix is not the high bidder at auction, TallyGenicom will pay it a $2 million break-up fee and reimburse up to $1 million of its expenses.

Competing bids must be for at least $40.13 million and include a $2.5 million good faith deposit.

Bids are due by noon ET on Feb. 20, and the auction will be held Feb. 25.

Bids at the auction must be for at least $100,000 more than the previous bid.

The company said the asset sale is expected to take about 45 days. During this time, Printronix said it will work with TallyGenicom to facilitate the transition.

"Should we gain approval to acquire these TallyGenicom assets, we will welcome the opportunity to offer a synergistic product portfolio to supply-chain printing customers worldwide," Printronix CEO Robert A. Kleist said in the release.

According to a Printronix news release, Printronix is looking to acquire the intellectual property, inventory and equipment to integrate the TallyGenicom line-matrix and serial-matrix printer series into its own portfolio.

Printronix said its acquisition of the TallyGenicom printer assets would be another milestone in a series of strategic decisions made in the year since Vector Capital completed its acquisition of Printronix in January 2008.

"Since taking Printronix private last year, Vector has helped the company significantly expand its global operations, increase its distribution channels and strengthen its management team," Vector Capital partner Amish Mehta said in the Printronix release.

Printronix said it expects some TallyGenicom employees could join Printronix after the sale, but it will make final staffing decisions upon completion of the transaction.

In conjunction with the bankruptcy filing, TallyGenicom has obtained a commitment for $29.15 million in debtor-in-possession financing to help the company meet its obligations to employees and suppliers during this period.

Dymas Funding Co., LLC is the administrative agent.

Interest will be 6½% plus the greater of 4% and the Base rate.

The DIP facility will mature on the earlier of 250 days and the sale closing date.

The company will pay a 2% commitment fee.

According to court documents, TallyGenicom had $34 million in assets and $62 million in debt as of Tuesday.

The company's largest unsecured creditor is Xerox International Partners, San Francisco, with a $1.31 million claim. TallyGenicom did not list any other unsecured creditors with claims of $1 million or more.

TallyGenicom is a Chantilly, Va., provider of printing solutions. Its Chapter 11 case number is 09-10266.

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