IdeaSphere Rescinds Initial Metabolife Offer 29266

IdeaSphere Rescinds Initial Metabolife Offer

HAUPPAUGE, N.Y.-- IdeaSphere Inc. (ISI) took advantage of its right to rescind its agreement to purchase the assets of Metabolife International, declaring the bankrupt diet company failed to fulfill obligations of the agreement, which was filed in U.S. Bankruptcy Court in July 2005. The withdraw follows several failed attempts by ISI to renegotiate with Metabolife to restructure the agreement to better reflect the current state of the business.

Attracted to the mass market penetration by Metabolife, which is in Chapter 11 bankruptcy, ISI originally filed a court bid of $23.5 million to purchase non-ephedra assets of Metabolife, including an Orem, Utah-based powder and tablet manufacturing facility and a Memphis, Tenn.-based distribution center. The agreement required Metabolife to operate business as usual while in bankruptcy. Among the business failures, ISI reported Metabolife lost several mass retail clients such as Costco; spent a mere $34,000 of its projected $900,000 in marketing and advertising support; and has much as 30 percent of its inventory beyond or near expiration. After Metabolife repeatedly refused to discuss a renegotiation of the agreement, ISI invoked its termination clause.

"We made a premium bid for the Metabolife assets in July because we believed they could be integrated very efficiently into our existing structure and operations, and the products were a good fit for our brand portfolio," said Mark Fox, president of ISI. "However, because Metabolife has not operated its business consistent with past practices as required by the agreement, we can no longer justify the original bid, as the value of those assets has diminished considerably over the past several months."

Fox reported ISI remains interested in buying the assets of Metabolife. ISI plans to file a new bid of $14 million, which Fox called a price that more accurately reflects the value of the assets today. However, he noted ISI will proceed with applicable bankruptcy court procedures to retrieve its $2 million purchase deposit, if no further agreement is made.