NASDAQ-listed Velti selling its India, US & UK mobile marketing businesses to GSO Capital Partners

Mobile marketing and advertising technology provider Velti Plc is selling its India, US, and UK mobile marketing businesses, as well as a certain part of its US-based advertising business to affiliates of GSO Capital Partners LP, the credit division of private equity firm Blackstone. The proposed transaction includes the sale of business lines operated by Velti Inc. and Air2Web Inc. in the US, Air2Web India, and Velti DR Ltd and Mobile Interactive Group, Ltd. in the UK.

The proposed sale is expected to close by the end of 2013, and all operations included in the proposed sale agreement will continue as normal throughout the sale process. While the financials of the agreement have remain undisclosed, GSO has also committed to provide up to $25 million in debtor-in-possession financing, including a $10 million cash injection to support the operations included in the proposed sale.

"Both this sale agreement and GSO's recent acquisition of our secured debt demonstrate GSO's commitment to providing the business with the support necessary to grow," said Alex Moukas, CEO, Velti. "Importantly, this process will be virtually invisible to customers, all of whom can continue to rely on Velti to provide technology and solutions to support their own businesses," he said.

Under the terms of the agreement (and to facilitate the sale), Velti's US operations have filed voluntary petitions under Chapter 11 of the US Bankruptcy Code with the US Bankruptcy Court for the District of Delaware to implement the sale under Section 363 of the Bankruptcy Code. Note that while the sale agreement includes the UK-based MIG business line and Air2Web India, these are not included in the Chapter 11 filing.

The filing also does not include any of the company's operations in the UK, Greece, India, China, Brazil, Russia, UAE, or any other jurisdictions outside the US. These entities, along with the mobile marketing businesses in the US, the UK, and India, will continue normal business operations. Velti's performance mobile marketing business will also continue to provide services to the businesses named in the current purchase agreement.

"The increasingly important need for businesses to have reliable mobile communication with their customers requires a sophisticated and scalable technology. We believe that the Velti platform, including the Air2Web and Mobile Interactive Group acquisitions, is well positioned to grow share in this market," said Scott Eisenberg, principal, GSO Capital Partners.

Velti's mobile marketing and advertising technology and solutions enable brands, advertising agencies, mobile operators and media to implement targeted, interactive and measurable campaigns by communicating with and engaging consumers via their mobile devices. The Velti platform, called Velti mGage, allows its customers to use mobile and traditional media to reach and engage targeted consumers, and convert them into customers.

It had acquired mobile customer relationship management provider Air2Web for $19 million back in September 2011. Founded in 1999 by Indian-origin entrepreneur Sanjoy Malik, Air2Web is into mobile messaging and marketing applications for enterprises and carriers.

Mobclix shutdown

The company has also announced that its wholly-owned subsidiary Mobclix, a mobile ad exchange, has filed a voluntary petition under Chapter 7 of the US Bankruptcy Code, and is shutting down its business. Note that Mobclix is the only Velti business that will cease operations, and the wind-down will be administered under the oversight of a court-appointed trustee.

(Edited by Joby Puthuparampil Johnson)