July 23 (Reuters) - Mobileum, a telecom services provider, filed for bankruptcy in Texas on Tuesday as it seeks to reduce $529 million in debt. The move comes amid a contentious dispute between its private equity owners over accusations that the company exaggerated its profits during its sale process.
The proposed restructuring plan aims to eliminate most of the company's debt and transfer control to its lenders. This plan has garnered support from a majority of the company's lenders and HIG Capital, a private equity firm that holds the majority of Mobileum’s equity. Mobileum intends to finalize its restructuring and emerge from bankruptcy within 60 days.
Mobileum CEO Mike Salfity expressed optimism about the company's future, stating that with a stronger balance sheet and support from financial partners, Mobileum will be better positioned to advance its business.
If approved, the bankruptcy deal will erase the equity investments of two conflicting private equity firms: HIG and Audax Group. HIG acquired its majority stake from Audax in a $915 million transaction in March 2022, about five years after Audax initially purchased the company. Following the deal, Audax retained a minority stake valued at $100 million.
The fallout from the sale led to legal battles between HIG and Audax in Delaware courts. HIG accuses Audax of inflating Mobileum's financial results before the sale. Audax denies these allegations and has countered with its own lawsuit, claiming that HIG's mismanagement led to the company's decline. Both lawsuits remain unresolved.
HIG has pledged to continue supporting Mobileum by holding accountable those responsible for the alleged fraud, including pursuing legal claims on behalf of itself, the company, and its lenders. Audax, on the other hand, has described Mobileum’s bankruptcy as a "disappointing and avoidable chapter" in the company’s history.
Headquartered in Cupertino, California, Mobileum specializes in providing analytics and other services to telecom clients.
The case is filed under In re: Mobileum Inc, U.S. Bankruptcy Court for the Southern District of Texas, No. 24-90414. For Mobileum, Jeffrey Saferstein and Gabriel Morgan of Weil Gotshal & Manges are representing the company.
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