Bertelsmann to bid high in Napster auction

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Bertelsmann to bid high in Napster auction

Industry rivals waiting for a piece of Napster finally had their chance, as assets of the bankrupt file-swapping service went up for auction Friday.

Napster's creditors are asking for $25m (£16.3m) for the defunct service in an auction due to be held on 27 August. The bid deadline closes on 21 August.

Trenwith Securities, a wholly owned subsidiary of BDO Seidman, is conducting the auction. Napster's creditors hired Trenwith at the beginning of this month to drum up interest in the auction, which is being held as part of Napster's Chapter 11 bankruptcy filing.

Napster filed for bankruptcy in June, two weeks after its major creditor, German media group Bertelsmann, agreed to purchase the service for $8m (£5.2m), after sinking close to $100m (£65.3m) of loans and other financing into the company.

Bertelsmann is expected to be the highest bidder, as it wants to use Napster to launch an online music subscription service. The conglomerate has said it will bid $9m (£5.8m) over the asking price.

What's more, Bertelsmann is offering to waive some $90m (£58.8m) in loans, plus an additional $5.1m (£3.3m) in debitor-in-possession credit it extended to keep Napster afloat, making its final bid worth more than $100m, according to Rick Chance, managing director of Investment Banking at Trenwith.

Despite Bertelsmann's hefty bid, Trenwith is casting a wide net for Napster's assets.

The firm is advertising the large growth opportunities predicted for online music subscription services to woo potential investors.

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