Prysm, the Laser Phosphor Display company, files for U.S. Chapter 11 bankruptcy protection.
The large format displays company sought Chapter 11 protection with liabilities of $273.6 million and assets of $4.6 million. Apparently Prysm have never achieved profitability on a GAAP or even cashflow basis. Never.
Since December 2015, Prysm financed its operations by issuing senior secured promissory notes.
What the company does have are software assets, hardware assets and huge NOL carryforwards (i.e., savings on future tax liability--a deferred tax asset that can be offset against net income in future years.)
Prysm went into Chapter 11 with a prepackaged plan agreed upon by at least the two most important classes of shareholders.
This plan spins out those assets in an unexpected way.
The sponsor of the plan (that means the company putting up the cash) is ESW Capital LLC, an investment firm owned by a reclusive billionaire that only purchases software companies.
What's a software company want from a large format display company? Apparently ESW see at least $15 million reasons to acquire the visual collaborative software that Prysm sold mainly as a value-add to their panels. When combined with Prysm’s visual workplace software, the LPD software platform can be leveraged for a multitude of use cases, from digital signage to interactive presentations to multi-site team collaboration.
But surely no one would pay that kind of money for another digital signage platform? It must be the collaboration and workspace opportunity.
ESW doesn't often make mistakes in software: unlike many other private equity companies, ESW focus on software and founder Joe Liemandt appeared as the youngest self-made member in the 1996 issue of The Forbes 400. He's back on that list with $3 billion net worth.
He's putting up $12 million in cash and $3 million in Debtor-in-possession (DIP) financing (which locks in certain assets) that includes $750,000 now just to keep Prysm going.
That's good news for Prysm as the hardware assets will go to a new company-- temporarily named for legal purposes as HardwareNewCo. They'll be picking up the pieces to have another go. Chances are likely they want to keep the same channel partners and have acquired that partner list as well. But they will need new funding to get going-- things bounce better on a soft cushion of millions of greenbacks.
The original backers of Prysm, GII Prysm Investments (the first priority secured creditor) gets its choice of some of that $12 million in ESW cash or stock in the HardwareNewCo. Will they take the stock? Will they also fund the hardware company? We don't know yet but the Kuwait sovereign fund is in that group. They have the money if they want to play the game (again).
Other creditors will get their share of $500,000. Some will probably only get pennies on the dollar if they are unsecured creditors-- companies such as any media companies running Prysm ads.
It's a sad story... the LPD display platform was an option for users who wanted a bezel-free large display (greater than 100”) that extended beyond the current size limitations of OLED and LCD formats, and delivered a comfortable ambient light experience, both for up-close touch interactivity and distance viewing.
You probably saw those large screens at ISE. Impressive.
Prysm's latest line of LPD displays included the world's largest interactive, single-panel display. Available in a stunning 225", 190" and 135", it excels as a solution for digital signage, up-close interactive use, and everything in between. And its rollable screen meant it can be installed in a wider variety of spaces.
Will Prysm live on as a brand? Seems the HardwareNewCo should keep the brand even if they give the company another name.
While Laser Phosphor Display will live to fight again, the more interesting story may turn out to be what ESW does with the software assets.
ESW Capital has purchased dozens of small U.S. software companies with a strategy of moving their workforce to foreign freelance workers. Crossover, which is actually the recruiting wing of ESW, has an army of 5000+ workers in 131 countries (Ukraine to Pakistan to Egypt). In the past 12 years, ESW has quietly acquired some 75 software companies, mostly in the U.S., and it exports as many as 150 high-tech jobs every week.
ESW is one big reason why Austin (Texas, USA) is today recognized as a technology hub.
