Ron Popeil, infomercial legend and perennial hawker of household gadgets, is wrestling with what could be one of the toughest sales to date: the bankruptcy auction of Ronco Corp., the company he founded in 1958 and sold two years ago.
Ronco, maker of the Veg-O-Matic, Showtime Rotisserie and the Pocket Fisherman, is in Chapter 11 bankruptcy proceedings and could slice off a big chunk of its debts on Aug. 1 when substantially all of its assets go on the block.
The question is whether Popeil wants to buy back in to the company after being in semi-retirement for the past two years an especially tough decision considering that fact that he’s Ronco’s largest unsecured creditor. He’s owed $15 million and he could lose it or much of it if he doesn’t bid.
“I really don’t know what I am going to do; I am taking a wait-and-see kind of attitude,” Popeil said late last week of wrestling with a decision to bid on his namesake company. “I did this to spend more time with my kids and family and buying back would seem to violate that. If I stay true to what I wanted to do then my guess is I won’t be going back (to Ronco), but I want to see what happens.”
Popeil said he’s plenty busy with a new venture, too, a specialty deep fryer for turkey or other foods that Ronco could have purchased the rights to but didn’t have the cash for. He said he would consider offering his new project to Ronco in the future, provided the company goes into financial recovery.
“I hope they can get it right this time,” he said.
According to court filings, Ronco has $13.9 million in assets and its creditors are owed a total of $32.7 million. Typically, unsecured creditors stand to lose in bankruptcy proceedings.
El Segundo firm Marlin Equity Partners LLC is the stalking-horse in the auction, which is being handled by Chanin Capital Partners. The company is looking for a quick sale earlier this month, Marlin tentatively agreed to acquire Ronco at the bankruptcy auction for $10 million in cash plus the assumption of certain liabilities.
Marlin representatives declined comment on the proposed sale.
According to Marlin’s Web site, the company invests in companies with $10 million to $500 million in revenue and seeks investment in “companies or divisions experiencing some form of financial, operational or market-related transition.”
Since filing to reorganize last month, the Simi Valley gadget company has maintained operations with an $11 million bankruptcy loan provided by New York-based Laurus Master Fund Ltd.
Inventor and marketing personality Popeil, a Beverly Hills resident best known for his appearances in the gadget infomercials, sold the company in 2005 for about $55 million.
But wait! There’s more to the bankruptcy back story.
The filing has exposed a bitter fight between former chief executive, Richard F. Allen, and the company’s current chief executive, John Reiland, a former senior financial analyst at Houston investment bank Sanders Morris Harris Inc. who took the reins in May.
Reiland declined to comment on the record, nor would the company’s bankruptcy attorney, Stacia Neeley.
The company fired Allen last year and sued him in February for allegedly submitting false business expenses; Allen countersued for $1.5 million, alleging that he was fired over his objections to Sanders Morris Harris’ role in the company’s business operations; SMH had named Reiland as Ronco’s leader as a condition of a $3 million loan to the company. Both suits are pending in state court.
Allen has accused the Houston investment bank of failing to investigate the company’s allegedly grim financial status before arranging Ronco’s sale to a group of investors in 2005, who took the company public through a reverse merger with Fi-Tek Inc.
