LG Electronics Acquires Zenith in Bankruptcy Agreement
One of the premier names in American electronics throughout most of the century, Zenith reached its peak in the 1950s and early '60s as it rode the wave of the growth of television. The company's long decline began with the rising dominance of the consumer-electronics market by Japanese and other Asian manufacturers in the early 1970s.
Zenith reached its nadir on August 23, 1999, when it filed a petition for reorganization under Chapter 11 of the bankruptcy code, following a doomed venture with Divx pay-per-view DVD players, its last foray into new technology. Circuit City-backed Divx had officially thrown in the towel just a few weeks before, when it became obvious that the market was embracing open DVD in overwhelming numbers.
The court settlement makes no provision for individual Zenith shareholders, according to news reports. The Wall Street Journal stated that the company's stock would be "canceled," and that stockholders would receive no distributions for their shares. As a new unit of LG Electronics, Zenith has secured a commitment for $150 million in credit from a group of banks headed by Citicorp North America Inc. Citicorp's group sustained the company through the two-month bankruptcy litigation with $150 million of debtor-in-possession financing.
Despite the bankruptcy, Zenith's brand name will live on. The company hopes to reinvent itself as a hip, innovative enterprise. Toward that end, it has announced the debut of a four-function remote control in five transparent fruit colors—its first new product as an LG Electronics subsidiary. The programmable remote, which retails for $14.95, is part of a larger trend toward bright colors in the consumer-electronics field. Apple Computer took the lead with this trend when it introduced its high-performance iMac computer in a variety of colors last year, and other manufacturers are jumping aboard.
"We noticed the success of the iMac with colors," said Len Coakley, Zenith's vice president for accessories. "We also noticed that retailers were running ads on different colors for various products like telephones, CD players, and tape recorders. So we decided to give it a shot in remote controls and we went with the five popular colors—lemon-lime, grape, blueberry, strawberry, and tangerine." The remote features a glow-in-the-dark keypad and operates most TVs, VCRs, cable boxes, and CD players.