Case Study

First Virtual Communications

CLIENT: First Virtual Communications ("FVC")

Gordian Group acted as investment banker to First Virtual in connection with the successful sale of the business through a Chapter 11 363 sale process.

Business Profiles

Situation

FVC provides real-time, video-enabled web collaboration and teleconferencing applications. These software-based applications address communications needs of organizations worldwide, including the U.S. government, commercial enterprises and Internet service providers. In 2004, FVC found itself with an unviable business plan and growth stalled with: (i) a difficult product migration to a single software platform and, (ii) a lengthy and extremely costly special investigation undertaken by FVC’s Board of Directors in connection with the discovery of accounting improprieties. These factors significantly limited the Company’s ability to obtain additional financing or implement a desired operational restructuring.

Engagement

After previous attempts to explore strategic and financial alternatives to raise capital, in late November 2004, FVC retained Gordian Group as its investment banker in connection with addressing its capital structure issues. Over the next few weeks, FVC hit an acute liquidity crisis. Given the severe liquidity crisis, the parties determined that the best option was a fast-track M&A with the commencement of a Chapter 11 case with a “stalking-horse” bid that would form the basis of a court-approved process.

Outcome

Gordian Group engineered a highly competitive sale process, consummated in March 2005. The process included negotiations with multiple bidders. In connection with the 363 auction, Gordian Group also deployed creative strategies to get a final purchase price that was approximately 40% higher than the “stalking-horse” bid. As a result of this competitive process, FVC retired all of its outstanding secured indebtedness, and unsecured creditors received a material dividend not anticipated at the time of the filing.