SIOUX FALLS, S.D. — LodgeNet Interactive Corp., a major distributor of adult entertainment through its hotel cable TV network, filed for Chapter 11 bankruptcy yesterday.
The bankruptcy is of the pre-packaged variety, and the company already has lined up lenders led by Colony Capital that will invest $60 million in it.
LodgeNet, which filed Chapter 11 at U.S. Bankruptcy Court in New York, said that it has been seeing declining revenue since 2009. The company hasn't turned an annual profit since 2006.
LodgeNet said that fewer hotels used its services — 1.5 million currently, down from two million in 2009 — and guests ordered fewer pay-per-view movies. The company, however, still provides services to Marriott International Inc., Starwood Hotels and Resorts Worldwide, Hilton Worldwide.
For years LodgeNet has been under threats posed by laptops, streaming Internet TV and portable devices. But prior to the boom of portable electronics, the hotel room was a virtual monopoly for cable TV suppliers.
One of its most lucrative areas is porn. Analysts back in 2011 speculated that about 50 percent of the company's revenue came from adult entertainment.
At bankruptcy court, the company claimed $291.7 million in assets and $448.7 million in liabilities in its petition.
Under the terms of the reorganization, LodgeNet's existing lenders will provide for a multiyear extension of its existing senior debt and unsecured creditors of LodgeNet will be paid in full in cash for any prepetition claims at the conclusion of the restructuring process.
"Our recapitalization is advancing on schedule," daid LodgeNet co-CEOs Frank Elsenbast and James Naro. "Thanks to the overwhelming support we've received from our lenders and suppliers, and with the solid commitment of Colony Capital and an expanded strategic partnership with DirecTV, we anticipate being able to complete this process on an expedited basis, and to emerge with the capacity to launch new and exciting products which will benefit both our hospitality and healthcare customers."
Pursuant to the reorganization plan, holders of existing Series B preferred stock and common stock issued by LodgeNet will have their interests cancelled and will not receive any distributions.
The company expects to complete its restructuring within 60 days.