Once the largest public company in the infomercial business, e4L Inc. (formerly National Media Corp.) has filed for Chapter 11 bankruptcy protection and is selling off assets to repay debts.
The company is probably best known as the producer of shows hawking such products as the Fitness Strider and Red Devil Grill, as well as a number of fitness infomercials hosted by Olympic gold medalist Bruce Jenner.
But faulty products and acquisitions that did not pan out prompted the company to file for protection. In its filing, e4L reported $36.4 million in assets and debts of $67.9 million.
Foothill Capital Corp., a subsidiary of Wells Fargo & Co., was the largest creditor, having extended the company a $20 million revolving line of credit. The lender notified e4L in September that, since its tangible net worth had dropped, it no longer qualified as a “going concern” and called for repayment of $11.7 million in outstanding debt. In November, e4L’s stock was delisted by the New York Stock Exchange for failing to trade above $1 a share for 30 consecutive days.
Stephen C. Lehman, chairman and CEO of e4L, did not return phone calls seeking comment last week.
Last October, e4L announced that its wholly owned subsidiary, Quantum North America Inc., had filed for Chapter 11 bankruptcy protection. At that time, e4L said it had signed an agreement to sell its Far East and Pacific Rim business operations, along with the remaining assets of Quantum North America, to VI Holdings Inc. for $12.25 million.
Brian Fraiden, a representative of VI Holdings, refused to comment on the deal, saying the transaction, which has not yet closed, was at a “sensitive point.”
E4L said in an SEC filing that it plans to use the proceeds of the sale to repay its debt to Foothill.
The bankruptcy filing is the culmination of troubles that have beset the company for years in the late ’90s, the Consumer Product Safety Commission determined that the company’s Fitness Strider exercise product and Red Devil Grill were defective and that each presented “a substantial product hazard.”
In July 1998, a controlling stake in the company was purchased for $25 million by an investor group led by Lehman, who at the time was president and CEO of Sherman Oaks-based Premiere Radio Networks Inc.
National Media made a series of acquisitions to bolster its finances, going as far as changing its name in early 1999 to e4L Inc. to highlight one of the company’s new ventures, an Internet and catalog-based membership shopping service called Everything4Less, the first of three such business in which it took a stake.
Though it intended to acquire strong revenue streams through these membership businesses, investors weren’t convinced.
The New York Stock Exchange suspended trading in e4L shares on Nov. 16, 2000. The next day, e4L Inc. reported a net loss of $37.5 million (86 cents per diluted share) for the second fiscal quarter ended Sept. 30, compared to a net loss of $4.9 million (19 cents a share) in the like year-earlier quarter.
Net revenues for the quarter were $21.1 million, down sharply from $73.6 million in the second fiscal quarter of 1999.
