Tech firm receives bid from Alorica $10.3 million offered for EnvisioNet Inc.

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BANGOR – A California company waited until the last minute Friday to submit what is being considered the best bid – at $10.3 million – to purchase beleaguered technology support company EnvisioNet Computer Services Inc.

Alorica Inc. of Chino, Calif., is offering a package that will assume ownership of EnvisioNet’s assets and pay off only a small percentage of the company’s up to $25.6 million in debts.

“They are acquiring the leases for our Maine facilities and the equipment; they’re acquiring all the operating assets for both of our Maine facilities, which means they’ll be staying [in Maine],” said George Marcus, an attorney for EnvisioNet.

EnvisioNet expects that its approximately 900 workers would keep their jobs.

EnvisioNet, with annual revenues of up to $30 million, filed for Chapter 11 bankruptcy protection in June. In its filing, EnvisioNet listed assets of $15 million and debts of $25.6 million, with $8 million of that convertible to equity.

But during the recent talks to purchase EnvisioNet, some of the assets, including equipment in the Orono facility, were devalued.

Alorica has given a deadline of next Wednesday for the sale to be final or the deal is off.

Its offer, however, could be outbid anytime before 9 a.m. Monday – a deadline set by U.S. Bankruptcy Court Judge James Haines Jr. Any other offer would have to be at least $100,000 more than Alorica’s to be considered.

Under bankruptcy rules, Haines must give final approval to the deal. He is to evaluate whether it is in the best interest of the company’s creditors.

Alorica employs as many people as EnvisioNet at call centers in the United States, Ireland and Taiwan. About 1,200 of Alorica’s 1,700 employees handle customer support requests through e-mails, interactive Web applications and telephone calls.

Alorica is an Internet solutions company, said Robert Martinek, director of business development, in July. The company uses a computer application it designed to reduce the time required to help customers. Some of its clients include U.S. Robotics, eMachines, NEC and American Express.

Up until 2 p.m., Alorica did not have the best bid. According to a source close to the discussions, another unnamed company was the highest bidder at $9.2 million.

Because it was the highest bidder at the time, EnvisioNet chief executive officer John Donnelly took a representative from that company to the Seattle area Thursday to meet with Microsoft officials, according to the source. Microsoft is one of EnvisioNet’s two biggest clients.

EnvisioNet’s relationship with Microsoft changed in May when the software giant reduced its estimates of customer call volumes by half. EnvisioNet employees offer support to Microsoft customers having trouble navigating Microsoft Network, the Seattle-based company’s Internet service.

The workload reduction forced EnvisioNet to initially lay off 600 of its 2,000 employees and close its Brunswick call center. Since May, EnvisioNet’s payroll ranks have dropped to about 900 employees at its call centers in Orono and Augusta.

Microsoft’s contracts with EnvisioNet reportedly may be close to expiration, but Alorica isn’t worried, said attorney Bruce Sleeper. Alorica will work with EnvisioNet’s clients to try to secure more work from them and others, he said.

“That’s a risk, a risk that has not gone away,” said Sleeper on Friday evening. “Microsoft may not continue to do business with this organization no matter who owns it. That’s a risk we’re willing to take.”

Alorica previously submitted and took back a bid for more than $12 million to buy EnvisioNet “The other bid basically was not really higher,” he said. “It’s basically the same type of bid.”

But both bids included future revenues based on the level of business, and the formula for determining those payments changed.

Asked about Alorica’s latest offer, Marcus said, “I think they recognized the value of the assets we have here, and decided they would like to acquire them.”

KeyBank, one of EnvisioNet’s primary lenders, and the Orono Economic Development Council were fighting the previous offer.

As of Friday evening, Sleeper said he had not heard from either regarding the new offer.

“If some people don’t like this, we have this weekend to talk and Monday morning as well,” he said.

Under the new offer, Alorica will assume certain capital leases up to $1.5 million; assume loans to KeyBank of more than $230,000; assume a promissory note to Orono in the original principal amount of $300,000, which is payable in monthly installments over a 10-year period; and assume the real estate leases for property in Orono and Augusta.

KeyBank recently gave EnvisioNet a line of credit totaling more than $5 million. Other investors have agreed to loan EnvisioNet $1.5 million, including an agreement for $375,000 from Alorica.

Sleeper said no money has been paid out yet on that loan agreement, but they are obligated to do so if asked.

OEDC, however, will not receive full payment of a nearly $2 million loan it gave EnvisioNet last year to purchase equipment for its Orono facility, but the balance may be covered by the state Department of Economic and Community Development.

In the bid, Alorica will pay back $300,000 of that loan, Sleeper said.

“That’s what we determined the value of the equipment to be,” he said.

Late last month, DECD sent a letter to the OEDC absolving it and the town of Orono from any liability and payback requirements in making $2 million in loans to EnvisioNet.

“While the department realizes there are inherent risks involved, it is critical we stand behind this business and allow the reorganization to occur in order to protect those jobs currently held and to allow for increased employment in the future,” wrote DECD Commissioner Steven Levesque.

Earlier this week, Levesque said the assumption of the loan is common practice for the state to help a company keep running.

Also in the bid is $300,000 to pay four executives and 42 team leaders of EnvisioNet for staying with the company during the bankruptcy court proceedings, in addition to about $580,000 in comp time and vacation time accrued by employees.

EnvisioNet initially had offered the retention bonuses to its management team, and Alorica said it would honor that agreement. Half of the money is to be paid the day the sale is completed, and the other half 30 days after that to ensure the work continues at the company.

But the attorneys representing EnvisioNet’s unsecured creditors and KeyBank have objected to the bonus plan when it was introduced by EnvisioNet in court last week, and the bankruptcy court judge could nix it from the purchasing agreement.

Sleeper said Alorica would pay the bonuses outside of the deal if the court says they can’t be a part of the offer.

“We want the employees to be happy,” he said.

The Associated Press contributed to this report.