Wattles Named Chairman of Ultimate Electronics12 Jan, 2005 By: Erik Gruenwedel
Home entertainment and electronics retailer Ultimate Electronics has named Hollywood Video founder and CEO Mark Wattles chairman of the board.
Denver-based Ultimate, which operates 65 stores in 14 states, made the announcement while filing for financial restructuring under Chapter 11 of the U.S. Bankruptcy Code.
The company, which listed debts of more than $160 million against assets totaling $329 million, said Wattles purchased 6.85 million shares of common stock for $4.4 million, with separate two-year agreements to purchase 1.85 million for $1.2 million and 1.8 million shares from Ultimate founder and chairman William Pearse for no more than 65 cents per share.
The transaction gives Wattles more than 31 percent control of Ultimate's stock and the right to name a majority of the company's board, according to company declarations.
Ultimate said it had obtained more than $118 million in debtor-in-possession financing subject to a borrowing-based formula from Wells Fargo and Wattles to keep daily operations going.
“After weighing all available alternatives, we believe this the best solution for Ultimate to remain a viable business going forward,” said Dave Workman, Ultimate's president and CEO.
Wattles' interest in Ultimate would appear to signal a change in career paths as Hollywood on Monday said it had agreed to an $850 million dollar merger with No. 3 video rental company Movie Gallery.
In a statement, Wattles said he was excited to be part of the Ultimate's future and committed returning it “to the growth company it was.”
“I think he has put in enough money to suggest to me that he has resolved himself that he is not going to be part of Hollywood from this point on,” said analyst Arvind Bhatia with Southwest Securities in Dallas. “He is probably [still] running it right now, but his interest definitely seem to be elsewhere.”