Gizmondo Imploding
Cash-Strapped Gizmondo Using Smart Adds as Equity:
Gizmondo Europe had received two separate short-term loans, together worth about $21.2 million, which the firm has yet to repay despite the fact that they were due late last year. The loans have subsequently been combined into a $22.4 million loan. This new agreement gives the company an extension to pay back the combined debts by June 30, 2006, but it also comes with a big risk—if Gizmondo fails to repay the loan the company would have to hand over the stock, IP and patents of its Smart Adds wholly owned subsidiary, which it’s using as collateral.
Furthermore, although the extension would appear to give Gizmondo until the end of June, it’s technically more complicated (read: difficult) than that. “If Tiger or any affiliate thereof has not raised or borrowed equity and/or debt in an aggregate amount in the vicinity of $75,000,000 on or before March 31, 2006, all principal, interest and other amounts set forth above shall be due and payable in full on March 31, 2006,” states the filing.
Unfortunatly, unless they can receive more investor funding or somehow get customers to buy this thing, this is only prolonging the inevitable.
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