Amp'd Mobile Inc., a Los Angeles wireless phone company that garnered more than $360 million from a broad range of well-heeled stockholders, is hoping to revive itself under the protection of a bankruptcy filing.
Amp'd Mobile, which counts MTV Networks and Universal Music Group among its investors, has marketed its phone and mobile-entertainment services to young, hip consumers by sponsoring motocross, surfing and other action-sports competitions.
Its "Lil' Bush: Resident of the United States" cartoon was such a hit on its mobile phones after being introduced last September that pay-television's Comedy Central picked it up for an initial run.
But burdened by more than $100 million in debt, including $33 million owed to Verizon Wireless for using its network and $16.4 million to Motorola Inc. for cellphones, Amp'd Mobile quietly filed a Chapter 11 petition in U.S. Bankruptcy Court in Delaware on Friday, barely 17 months after launching its service.
The filing is likely to wipe out not only the company's debt but also ownership stakes and preferred stock -- totaling nearly $18 million -- held by MTV, Universal Music, Redpoint Ventures, Highland Capital Partners, Columbia Capital Equity Partners and Amp'd Mobile's founder and embattled chief executive, Peter A. Adderton.
Adderton is the company's biggest single shareholder with 900,000 shares, or 5%, of the stock. For the last two weeks, rumors abounded about a rift between Adderton and some directors, and about his possible departure.
The company said in a statement issued over the weekend that its "senior management team remains largely intact." Adderton could not be reached Sunday.
Amp'd Mobile said in the statement that it would try to restructure its debt while continuing to serve its 200,000 customers, including those in Canada and Japan, markets it recently had entered.
"As a result of our rapid growth, our back-end infrastructure was unable to keep up with customer demand," Amp'd Mobile said. "We are taking this step as a necessary and responsible action to sustain and strengthen our momentum in the marketplace."
Some analysts figured it was only a matter of time before the company went into bankruptcy.
"They got eight different types of venture capital firms backing them. They got high subscriber-acquisition costs. And they are having a hard time getting additional financing," said Alex Besen, whose Besen Group consulting firm in Oakton, Va., helps small cellphone companies.
