SONICblue Files Chapter 11

Facing a sea of red ink and a crushing $335.5 million debt load, SONICblue
Inc. is looking to sell off its ReplayTV digital-video-recorder unit to a
Japanese outfit, even as it files for Chapter 11 bankruptcy for itself and three

SONICblue filed the Chapter 11 petitions with the U.S. Bankruptcy Court in
California's Northern District for itself, as well as its ReplayTV, Rio and
GoVideo subsidiaries.

In turn, the Santa Clara, Calif.-based company has signed a nonbinding letter
of intent with Japan's D&M Holdings Inc. to sell its ReplayTV and Rio MP3
units for $40 million.

That amount may drop by as much as $5 million depending on assumption of
certain liabilities, and it will be subject to bankruptcy-court approval,
according to a company release.

D&M is the parent company for audio-equipment providers Denon Ltd. and
Marantz Japan Inc.

SONICblue has also forged a deal with Opta Systems LLC to sell its GoVideo
digital set-top business unit for $12.5 million, pending bankruptcy-court

But neither sale is a done deal -- under bankruptcy rules, SONICblue must
open itself up to auctions for its assets and consider any competitive bids that
come in.

"We have great confidence in our business units, and we worked to develop a
plan that would permit SONICblue to continue operating within the significant
constraints imposed by our debt and legacy liabilities," CEO Gregory Ballard
said in a release.

"In the end, we and our financial advisors have concluded that the best
outcome for our creditors and our employees is to sell our businesses to
better-heeled owners," he added.