Voxel resumes search for buyer after two acquisition deals falter

Without a buyer, company could be sold piecemeal

Holography developer Voxel found itself back on the auction block this month after two proposed deals to sell the company fell through. Now, instead of celebrating a successful sale and moving forward with a new business strategy, the firm is seeking another buyer. Although company executives are optimistic that Voxel will receive new offers soon, the situation is urgent: If Voxel isn’t sold whole before the end of March, the bankruptcy court managing its affairs may insist on selling off its assets piecemeal.

Voxel had originally expected to be purchased by Holographic Dimensions, a Miami-based security hologram manufacturer that in September signed a letter of intent to buy the struggling Laguna Hills, CA, company. In a related deal, HDI agreed to support Voxel’s operations with a super-priority lien of $240,000 at 10% interest, distributed over four months (SCAN 9/30/98). HDI would be reimbursed for the loan funds either by another buyer or by a reduced purchase price if its own bid to buy Voxel was successful.

But HDI didn’t find the capital quickly enough. In December, Wireless Netcom of Incline Village, NV, filed a definitive purchase agreement for Voxel and plunked down a $50,000 cash deposit. Wireless and HDI made a deal: If Wireless successfully purchased Voxel, it would give a certain number of shares to HDI.

With its agreement and cash on the line, Wireless entered the 24-day overbid period required by bankruptcy law. Since no other offers were forthcoming, the court approved the company’s purchase agreement on Jan. 5 and called for a conclusion of the deal by the next day. The transaction faltered when Wireless failed to come through with funds to close the sale, sending its bid into default. That put Voxel back on the block, according to Stephen Hart, Voxel’s director of research and development.

“HDI still wants to make an offer, and Wireless wants to close. But Voxel is essentially back in an open bid period—anyone with another offer and a deposit can come forward,” Hart said.

Voxel’s quest for an acquisition partner began last year, when former manufacturing partner General Scanning of Watertown, MA, won a legal dispute against it (SCAN 8/19/98). Unable to pay GSI an arbitration award of $1.9 million, Voxel was forced to apply for bankruptcy protection.

Despite its financial troubles, Voxel made progress in refining its business strategy at the RSNA meeting last December in Chicago. The company’s new tactic is to sell its 3-D holographic Voxgram images to hospitals on a per-use basis, rather than requiring a facility to purchase the equipment needed to produce and read the Voxgrams (SCAN 12/16/98).

But with Wireless in default and HDI scrambling for funds, Voxel is back to waiting for other acquisition offers. Bankruptcy court trustee Thomas Casey will bring any acquisition proposals before the court for approval, which would trigger another 24-day cycle. The court has allowed Casey to continue to pay the company’s rent and expenses through the end of March. Yet if March comes and goes without another serious buyer, the court may allow Voxel’s assets to be sold off piece by piece. Despite the high stakes, Voxel remains hopeful.

“(The company) has other offers in the works. We expect another offer in a week or so,” Hart said.