Digital Domain Media Group said Tuesday it has defaulted on payment obligations and is in talks with a lender and strategic partner to emerge from financial crisis, according to a report by The Palm Beach Post.
In an SEC filing, the company said it has appointed Michael Katzenstein interim chief operating officer reporting to a new special board committee. Katzenstein is a senior managing director of FTI Consulting.
Digital Domain has been financially troubled this summer as it failed to meet certain debt covenants with lenders, and was ultimately given a month to restructure its debt. With no agreement in place by late August, lenders cried default and demanded full repayment of principal and interest of about $55 million.
Because of the loan default, Digital Domain said in a filing with the Securities and Exchange Commission, it now must pay $51 million, including $16 million in interest and penalties, to a group of institutional investors led by Tenor Capital Management of New York. But Digital Domain had only $6.6 million in cash on its balance sheet as of June 30, and the company said bankruptcy is a possibility.
“I wish we never went public,” Textor said in a presentation to West Palm Beach city commissioners. “We’re a very confusing story as a public company.”