Computer DVD drive maker CenDyne to shut offices

August 21, 2003

StrongBad lets us know that according to this
article (you need to register to be able to read it) computer DVD drive maker
CenDyne has to shut its offices after a
judge ordered the company to pay $ 20 million to Taiwanese creditor
Test Rite, which took over operations two weeks ago:

CenDyne, one of the biggest brands in computer DVD drives,
already was reeling from mounting losses and top-level resignations.

For the first six months this year, CenDyne lost $
17.5 million, which spurred the lawsuit from Test Rite International, the
Taiwanese investor that provided CenDyne with inventory and services. Test
Rite seized control of the company two weeks ago.

Test Rite, based locally in Ontario, took control of the
privately held CenDyne after founders Ed Meadows, Mo Vahdati and Dean
Vahdati, abruptly resigned.

Test Rite's lawsuit alleged that the trio made false
statements "with the intent to defraud and deceive" Test Rite in order to
attract investment.

Test Rite said it had discovered in November that CenDyne
had doled out $ 2.4 million in "secret" consumer rebates and price
guarantees to retailers, which caused CenDyne to restate its financial
reports.

Another $ 2.8 million in rebates was discovered in July,
the lawsuit says.

The lawsuit alleged that CenDyne owed Test Rite $ 22.7
million for the purchase of goods, rebate liabilities and short-term
liabilities.

Last year, CenDyne was the leading brand in computer
DVD drives sold at retail, according to The NPD Group. It captured 17.7
percent of the market, significantly ahead of second-place I/OMagic Corp.,
at 10 percent, and Sony Corp., at 7.8 percent. In the first six months of
this year, CenDyne dropped to second place, at 13.7 percent, while Sony
moved to the lead with 20.5 percent.

The CenDyne company employed 72 people. Read the complete
article here (after free registration).

Source: ocregister.com