Mobile marketing company Hipcricket has made its last chirp as an independent company.
The Bellevue-based company said that its assets have been acquired by SITO Mobile for $4.5 million.
Hipcricket, with annual revenues of $26.7 million and 21 U.S. patents, filed for bankruptcy protection earlier this week.
“Consistent with our goal to accelerate our growth, if completed, the acquisition of Hipcricket will bolster our services and solutions and increase our revenue from a customer base which would then include 38 of the Fortune 100 companies,” said Jerry Hug, CEO of SITO Mobile.
In a press release, Hipcricket CEO Todd Wilson said that a court-approved sales of assets is “the most viable option to protect our human capital and maximize recovery for our stakeholders.”
Here’s the full press release from Hipcricket:
BELLEVUE, WA–(Marketwired – Jan 21, 2015) – Hipcricket, Inc. (OTCQB: HIPP) (the “Company”), announced today that it has entered into an asset purchase agreement (“agreement”) with SITO Mobile Ltd. (OTCQB:SITO), as the “stalking horse” bidder to acquire substantially all of the Company’s assets for aggregate consideration of approximately $4.5 million. To facilitate the sale, the Company has filed a voluntary petition under Chapter 11 in the United States Bankruptcy Court (“Court”) for the District of Delaware along with a motion seeking authorization to approve bid procedures under Section 363 of the U.S. Bankruptcy Code.
During this process, Hipcricket expects that its day-to-day operations will continue uninterrupted, subject to Court approval of Hipcricket’s “first day” motions. The Company is seeking Court approval to maintain its current employee benefits and payroll programs, maintain its existing cash management system and pay ongoing use and sales taxes in the ordinary course of business. In order to fund operations during the sale period, SITO Mobile has agreed to provide Hipcricket up to $3.4 million in debtor-in-possession (“DIP”) financing. The proposed sale bidding procedures, DIP financing and Hipcricket’s asset purchase agreement all are subject to Court approval.
“Over the past year, management has worked diligently to optimize Hipcricket’s expense structure and move Hipcricket toward profitable and sustainable revenue growth,” said Todd Wilson, Hipcricket’s Chairman and Chief Executive Officer. “While we have implemented various cost-cutting initiatives and explored a wide variety of strategic alternatives, the benefits of these efforts could not be fully realized and liabilities continued to mount. As such, the Board determined that a sale of assets via a court-supervised process provides Hipcricket the most viable option to protect our human capital and maximize recovery for our stakeholders. We are pleased that SITO Mobile has agreed to carry our business forward. We believe this partnership will provide a new foundation upon which to stand and brings together two best-in-class mobile marketing and mobile advertising solutions.”
Under the terms of the agreement, SITO Mobile would offer employment to all Hipcricket employees and there are not expected to be any changes to customer contracts, agreements and services. It is contemplated that Todd Wilson, Hipcricket’s Chief Executive Officer, would join SITO Mobile as a consultant during a six to twelve month transition period following the sale to help facilitate a seamless integration.
“By joining together Hipcricket and SITO Mobile, we will effectively be creating a market leader in mobile marketing and location based mobile advertising,” said Jerry Hug, Chief Executive Officer of SITO Mobile. “We look forward to working with Todd and the rest of the Hipcricket team.”
As part of the sale process under Section 363 of the Bankruptcy Code, other interested parties will have an opportunity to submit bids, and the SITO Mobile stalking horse bid is subject to higher or better offers. The final highest or best bid will then require Court approval. The Company anticipates the sale culminating within 45 to 60 days.
Based upon the anticipated outcome of the transaction, Hipcricket’s assets are expected to be insufficient to satisfy all its obligations to creditors. Accordingly, as provided under applicable law, it is expected that no distributions will be made to holders of the Company’s common stock and the common stock will be extinguished upon consummation of the Chapter 11 plan.
Pachulski, Stang, Zeihl & Jones LLP and Perkins Coie LLP are serving as the Company’s legal advisors and Canaccord Genuity is serving as its financial advisor.
For access to Court documents and other general information about Hipcricket’s Chapter 11 case, please visit: www.omnimgt.com/hipcricket.
Hipcricket, Inc. (OTCQB: HIPP) provides a unified mobile engagement platform that drives awareness, sales and loyalty. Its AD LIFE® platform has been used by internationally recognized brands and agencies to power more than 400,000 campaigns across SMS, 2D/QR codes, mobile websites, advertising networks, social media and branded apps. For more information visit www.hipcricket.com.
Hipcricket®, AD LIFE® and the Hipcricket logo are trademarks of Hipcricket, Inc. All rights reserved. 2009-15.