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"The remaining AlphaStar and AlphaStar Television assets, including the Milton, Ont., and Oxford, Conn., uplink stations, and real estate, manufacturing facilities, and the inventory of set-top decoder boxes and antennas, will be offered for sale by the receiver and AlphaStar Television over the next few weeks, Ernst & Young said."
Tee-Comm Electronics Inc.
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AlphaStar signs off in latest satellite setback
AlphaStar signs off in latest satellite setback
Thursday, August 7, 1997
By Geoffrey Rowan
The Globe and Mail
At 3 a.m. today, the television screens of subscribers to Canada's first direct-to-home TV service, AlphaStar Canada Inc., went blank, ending a sorry chapter in the competition to bring satellite TV to Canadians.
"We had until Aug. 5 to come up with a buyer for all the [AlphaStar] assets," said Brian Denega, senior vice-president for Ernst & Young, the receiver for the now defunct company.
"We attempted to run a process that was exhaustive and sought bids from anybody who wished to buy it as a going concern and keep it alive," Mr. Denega said, "but there were no bids."
AlphaStar had about 7,000 subscribers in Canada, and about 60,000 in the United States, where it did business as a subsidiary of Tee-Comm Electronics Inc. of Milton, Ont., under the name of AlphaStar Television Networks Inc.
AlphaStar Television sought protection under Chapter 11 of the U.S. Bankruptcy Code on May 27. AlphaStar's parent, Tee-Comm, went into receivership June 4, never recovering from a break with Canada's original satellite television consortium, ExpressVu Inc. Expressvu has yet to launch a service but says it will this September.
AlphaStar subscribers continued receiving TV signals, even as the Canadian receiver and U.S. courts tried to find a buyer who would keep the service running.
The lack of any bid for AlphaStar and AlphaStar Television, based in Stamford, Conn., by the Aug. 5 deadline triggered another deal.
Now, Loral Space & Communications Ltd., a unit of New York's Loral Corp., will buy back satellite transponders that it leased to AlphaStar Television on its Telstar 402R and Telstar 5 satellites, receiver Ernst & Young said.
The Loral buyback agreement calls for a transfer of value to AlphaStar of $8.7-million (U.S.), including a cash component of $5-million, plus a share of the profit earned by Loral through its re-leasing of the Telstar 5 satellite transponders to other companies.
AlphaStar Television will receive between 35 and 50 per cent of any such future profit, depending on the average contract term of the new leases entered between Loral and other companies.
Ernst & Young said the agreement also entitles Loral to be paid $7.3-million under a letter of credit held by it in satisfaction of AlphaStar's rent arrears to Loral.
The remaining AlphaStar and AlphaStar Television assets, including the Milton, Ont., and Oxford, Conn., uplink stations, and real estate, manufacturing facilities, and the inventory of set-top decoder boxes and antennas, will be offered for sale by the receiver and AlphaStar Television over the next few weeks, Ernst & Young said.
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Tee-Comm Electronics, Inc.
On February 3, 1998, a class action lawsuit was filed on February 3, 1998, in the United States District Court for the District of Connecticut, on behalf of all persons who purchased or otherwise acquired the common stock of Tee-Comm Electronics, Inc. ("Tee-Comm" or the "Company") between July 31, 1996 and May 27, 1997, inclusive (the "Class Period"). The complaint charges the Chief Executive Officer and Chief Financial Officer of Tee-Comm, among others, during the relevant time period, with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, by, among other things, issuing to the investing public materially false and misleading statements and press releases concerning Tee-Comm's satellite television division, AlphaStar Television Network, Inc. ("AlphaStar"). Specifically, the complaint alleges that, at all relevant times, defendants issued a series of statements which portrayed Tee-Comm and Alphastar in highly positive terms while failing to disclose that the Company was rapidly running out of cash, was not generating sufficient new subscribers and revenue to continue as a going concern and was nearing insolvency. Because of the issuance of a series of materially false and misleading statements and press releases concerning Tee-Comm's financial condition and the operations of AlphaStar, the price of Tee-Comm common stock was artificially inflated during the Class Period. On May 27, 1997, Tee-Comm issued a press release announcing that the Company's lender had demanded immediate repayment of all existing credit facilities and that its Board of Directors had resigned. That same day, Tee-Comm announced that AlphaStar had filed for bankruptcy. In response to these announcements, on May 27, 1997, the price of Tee-Comm stock closed down at $0.50 per share, a decline of 95% from a Class Period high of $10.1875 reached on September 16, 1996. Thereafter, Tee-Comm's U.S. divisions all filed for bankruptcy. On June 3, 1997, trading in the Company's stock was halted and, subsequently, it was delisted from trading on NASDAQ. |
