rVue Holdings Inc (OTCMKTS:RVUE) Banking On Roche

On May 10, 2017, shareholders of rVue Holdings Inc (OTCMKTS:RVUE), the advertising technology company, saw the share price collapse as they got to know that RVUE was unable to repay the short-term bridge secured financing provided by Roche Enterprises. A default had been announced, thus the share price reacted obviously negatively. The price went from trading close to $0.04 to touch the level of $0.01 on high volume. Roche Enterprises noted its intention to "conduct a public sale of the assets under the Uniform Commercial Code (UCC) on or about May 31, 2017."SourceLike it always happens, market participants overreacted to the negative news. We saw later that the situation was not as bad. On June 21, 2017, RVUE announced that Roche had made a bid of $100,000 to cancel the debt and take ownership of the Company's assets. The news made the share price again react positively. The share price went from $0.01 back to $0.028 as of July 4, 2017. In this article, we will explain what happened.BusinessSourcerVue Holdings, Inc., was founded in Nevada on November 12, 2008. According to the company documents, it is "an advertising technology company that has developed and operates an integrated advertising exchange and digital distribution platform".We have reviewed the company at another occasion. We wrote a piece back in 2016 when the company was booming in the OTC Markets. Have a look at it to understand the the business of the company a little more .This is what we mentioned last time:

"The company connects approximately 1.5 million digital screens across 175 networks delivering access to 250 million daily impressions in one simple platform. Backed by the industry’s most intuitive and intelligent platform, rVue has the technology, data and expertise to connect brands and targeted consumers where and when it matters most.” Source

We prefer to focus, in this article, on how Roche acquired the company. Why? Because it is Roche who knows the next step of RVUE, as it controls the company and its assets. Hence, studying Roche makes much more sense now.Short-term bridge secured financing given by Roche EnterprisesOn January 31, 2017, RVUE noted that it had secured short-term bridge financing thanks to Roche Enterprises, Ltd., which was the largest shareholder of RVUE. We could read in the same press release about the announcement that the company had sold another secured convertible loan to Roche in October 2016. The company said that the capital raised would be used for "working capital and to cover operating costs". Mark Pacchini, CEO and President of rVue, explained in following words:

"The rVue team continues to be optimistic about the future of Digital Location Video…its unparalleled ability to reach people at the "right" moment and with the "right" message. The management group and I believe, in the days ahead, DLV will prove to be a significant and critical means to augment most media plans." Source

The DefaultOn May 10, 2017, the company announced that it had received a notice of default and a demand for payment from Roche Enterprises, Ltd. as well as an affiliate of director Robert Roche. RVUE answered to the default stating that it would sell some of the company's assets to pay Roche:

"It is the Company's current understanding that Roche Enterprises intends to conduct a public UCC sale of the Company's assets, on or about May 31, 2017, after first publishing notice thereof in appropriate trade publications, and that at that sale, Roche Enterprises intends to bid the entire amount of the Secured Debt for such assets. If there is no higher bidder, then Roche Enterprises would obtain title to the Company's assets in return for cancellation of the Secured Debt" Source

Here is the explanation of the CEO:

"We are disappointed by Roche Enterprises' decision to foreclose on the notes, but the board of directors and I fully understand the business reasons for such a move. Robert Roche and Roche Enterprises have been rVue's biggest advocates. We greatly appreciate them and all investors for their capital contributions, patience and support. The rVue team has worked diligently to keep costs in line with revenue, including the decision to go dark. And we've explored various new business strategies and sought other reasonable methods of financing, but we recognize the company can no longer continue to operate under its current revenue stream and in its current form." Source

The bid of Roche - What happens next?Finally, on June 21, 2017, as promised, Roche acquired RVUE's assets in return of the cancellation of the debt by bidding $100,000. No other bidder appeared, thus Roche obtained the deal at that price. Will the company continue its operations? In the press release, it was stated that the company will not be able to operate without the assets now owned by Roche.What happens next? We share the vision shared by other market participants in the iHub forum:

"Roche has so many options. Maybe he will save shareholders (aka himself and us) by putting the RVUE assets back into the RVUE shell and becoming our new CEO." iHub Forum

Nobody was interested in the assets of the company, thus we don't really believe that Roche can obtain a lot of money by selling them. Would it not be more interested in obtaining shares from the company in exchange for the assets, and run the company again? This is a possibility.Market reaction and conclusionThe market appreciated that Roche decided to bid for the assets. The share price increased sharply. The reason? RVUE had a total amount of debt equal to $416,000 with Roche, which was canceled. Market participants saw how the financial risk of the company diminished, which was celebrated. Another explanation may be that market is discounting that director Robert Roche will become the new CEO, who could save the company.In conclusion, in the last months, the market saw how debt holders acquired the company's assets in exchange for canceling the debt. Usually, debt holders obtain shares instead of acquiring the assets. But, this situation was different. We believe that the history of the company may not finish here. Robert Roche could run the company, or he could sell it to another competitor. Be alert on this one, as news may surprise again, positively.We will be updating our subscribers as soon as we know more. For the latest updates on RVUE, sign up below!Image courtesy of FlickrDisclosure: We have no position in RVUE and have not been compensated for this article.