Please don't lock this, a lot of people have rebates coming from this company. I just wanted to warn anyone from buying anymore Cendyne products.
Tuesday, August 19, 2003
Ruling forces CenDyne to shut offices
Judge orders computer DVD drive maker to pay creditor Test Rite, which took over operations, $20 million.
By TAMARA CHUANG
The Orange County Register
SANTA ANA ? CenDyne Inc. was forced to shut down Monday after a state judge ruled that it had to repay a Taiwanese creditor more than $20 million.
CenDyne, one of the biggest brands in computer DVD drives, already was reeling from mounting losses and top-level resignations.
For the first six months this year, CenDyne lost $17.5 million, which spurred the lawsuit from Test Rite International, the Taiwanese investor that provided CenDyne with inventory and services. Test Rite seized control of the company two weeks ago.
On Thursday, California Superior Court Judge Robert H. Gallivan ordered CenDyne to pay its creditors and appointed Robb Evans & Associates as receiver.
"We're trying to liquidate the assets of the company for the benefit of the creditors," said Brick Kane, chief operating officer at Robb Evans.
CenDyne's Susan Street offices were somber Monday as employees learned the news. A security guard sat outside to inform those who had not heard. CenDyne employed 72 people.
Gavin McCalla, CenDyne's chief executive officer, and Bob Miles, CenDyne's chief financial officer, did not return calls seeking comment Monday.
McCalla and Miles are also CEO and CFO at the U.S. division of Test Rite. Test Rite, which provides packaging, design and logistics to retailers, invested $4.5 million in CenDyne last summer, gaining 42 percent of the company, said Test Rite.
Test Rite, based locally in Ontario, took control of the privately held CenDyne after founders Ed Meadows, Mo Vahdati and Dean Vahdati, abruptly resigned.
Test Rite's lawsuit alleged that the trio made false statements "with the intent to defraud and deceive" Test Rite in order to attract investment.
Test Rite said it had discovered in November that CenDyne had doled out $2.4 million in "secret" consumer rebates and price guarantees to retailers, which caused CenDyne to restate its financial reports.
Another $2.8 million in rebates was discovered in July, the lawsuit says.
The lawsuit alleged that CenDyne owed Test Rite $22.7 million for the purchase of goods, rebate liabilities and short-term liabilities.
Test Rite's lawyers did not return calls.
Meadows, CenDyne's former president, and Mo Vahdati, former chief executive, did not return calls. Dean Vahdati could not be reached for comment.
Test Rite says it has suffered from its investment in CenDyne.
On July 29, JP Morgan downgraded Test Rite's stock to "underweight" from "overweight" and lowered its earnings estimate by 29 percent because of "significantly worse results at CenDyne versus our original forecast." CenDyne's losses had hit $17.5 million for the first half of the year, and more losses were revealed to Test Rite in July, the lawsuit said.
Last year, CenDyne was the leading brand in computer DVD drives sold at retail, according to The NPD Group.
It captured 17.7 percent of the market, significantly ahead of second-place I/OMagic Corp., at 10 percent, and Sony Corp., at 7.8 percent.
In the first six months of this year, CenDyne dropped to second place, at 13.7 percent, while Sony moved to the lead with 20.5 percent.
"It's a healthy industry, but the industry is competitive," said Tom Edwards, senior industry analyst for NPD.
"It's an industry that, as I've said for 25 years, it eats its young. If CenDyne leaves, somebody else will step in."
Tuesday, August 19, 2003
Ruling forces CenDyne to shut offices
Judge orders computer DVD drive maker to pay creditor Test Rite, which took over operations, $20 million.
By TAMARA CHUANG
The Orange County Register
SANTA ANA ? CenDyne Inc. was forced to shut down Monday after a state judge ruled that it had to repay a Taiwanese creditor more than $20 million.
CenDyne, one of the biggest brands in computer DVD drives, already was reeling from mounting losses and top-level resignations.
For the first six months this year, CenDyne lost $17.5 million, which spurred the lawsuit from Test Rite International, the Taiwanese investor that provided CenDyne with inventory and services. Test Rite seized control of the company two weeks ago.
On Thursday, California Superior Court Judge Robert H. Gallivan ordered CenDyne to pay its creditors and appointed Robb Evans & Associates as receiver.
"We're trying to liquidate the assets of the company for the benefit of the creditors," said Brick Kane, chief operating officer at Robb Evans.
CenDyne's Susan Street offices were somber Monday as employees learned the news. A security guard sat outside to inform those who had not heard. CenDyne employed 72 people.
Gavin McCalla, CenDyne's chief executive officer, and Bob Miles, CenDyne's chief financial officer, did not return calls seeking comment Monday.
McCalla and Miles are also CEO and CFO at the U.S. division of Test Rite. Test Rite, which provides packaging, design and logistics to retailers, invested $4.5 million in CenDyne last summer, gaining 42 percent of the company, said Test Rite.
Test Rite, based locally in Ontario, took control of the privately held CenDyne after founders Ed Meadows, Mo Vahdati and Dean Vahdati, abruptly resigned.
Test Rite's lawsuit alleged that the trio made false statements "with the intent to defraud and deceive" Test Rite in order to attract investment.
Test Rite said it had discovered in November that CenDyne had doled out $2.4 million in "secret" consumer rebates and price guarantees to retailers, which caused CenDyne to restate its financial reports.
Another $2.8 million in rebates was discovered in July, the lawsuit says.
The lawsuit alleged that CenDyne owed Test Rite $22.7 million for the purchase of goods, rebate liabilities and short-term liabilities.
Test Rite's lawyers did not return calls.
Meadows, CenDyne's former president, and Mo Vahdati, former chief executive, did not return calls. Dean Vahdati could not be reached for comment.
Test Rite says it has suffered from its investment in CenDyne.
On July 29, JP Morgan downgraded Test Rite's stock to "underweight" from "overweight" and lowered its earnings estimate by 29 percent because of "significantly worse results at CenDyne versus our original forecast." CenDyne's losses had hit $17.5 million for the first half of the year, and more losses were revealed to Test Rite in July, the lawsuit said.
Last year, CenDyne was the leading brand in computer DVD drives sold at retail, according to The NPD Group.
It captured 17.7 percent of the market, significantly ahead of second-place I/OMagic Corp., at 10 percent, and Sony Corp., at 7.8 percent.
In the first six months of this year, CenDyne dropped to second place, at 13.7 percent, while Sony moved to the lead with 20.5 percent.
"It's a healthy industry, but the industry is competitive," said Tom Edwards, senior industry analyst for NPD.
"It's an industry that, as I've said for 25 years, it eats its young. If CenDyne leaves, somebody else will step in."