Las Vegas company buys assets of bankrupt Spintek Gaming

Grace Leong

Wednesday, March 28, 2001 | 11:20 a.m.

Buyer sued

A Las Vegas casino equipment maker sued two suppliers of devices for vending machines, alleging they defaulted on a $182,015 payment for equipment ordered.

In a Clark County District Court suit, RNB Enterprises Inc. and its owners, Raymond and Linda Bennett sued VendingData Corp., formerly known as CVI Technology Inc.; and its subsidiary Casinovations Inc.

Steven Blad, VendingData's chief executive, disputed the allegations.

"We've paid them a considerable amount of money, but they've missed some deadlines for delivering electronic boards and other products," Blad said.

The largest creditor of bankrupt Spintek Gaming Technologies Inc., Malcolm C. Davenport V, said today he has sold the company's gaming assets to VendingData Corp., a Las Vegas-based components maker.

Davenport said the deal was for about $1.15 million in VendingData stock, warrants and cash and followed a bankruptcy judge's approval of the asset sale to him last week.

Las Vegas-based Spintek Gaming Technologies and its subsidiaries, Spintek Gaming Inc. and Spinteknology Inc., which owned the gaming equipment, inventory and intellectual property, filed for Chapter 7 bankruptcy in November because of a cash shortfall following a failed attempt to arrange financing.

U.S. Bankruptcy Court Judge Linda Riegle on March 22 approved a request by the bankruptcy estate's trustee, Tim Cory, to sell a substantial portion of Spinteknology free and clear of liens, claims and interests to Davenport.

Davenport, who said he loaned $5.738 million to the firm and had sought to foreclose on its gaming patents -- which he said were collateral for the loans -- agreed on Jan. 31 to pay $150,000 cash for Spinteknology's equipment and inventory and offered "a $1 million credit bid and cancellation of secured debt for the intellectual property,"which includes patents, unpatented inventions and technology rights.

Spintek Gaming Technologies was a publicly traded company that primarily marketed "Accusystem," which tracks slot machine coin hopper levels. VendingData is in the process of developing a coin hopper level tracker called SecureHopper, using the technology acquired from the Spintek purchase.

"The acquisition of this technology ... will allow us to give gaming operators a more complete solution for monitoring slot revenues," said Steven Blad, CEO of VendingData."We intend to complete the development and rollout of the SecureHopper and soft currency products in the third quarter of 2001."

Riegle, in her March 22 order, said the purchase price was "fair and reasonable, and is the highest and best offer for the assets and other rights and benefits acquired and will provide a greater recovery for (Spintek's) creditors than would be provided by any other practical available alternative."

Riegle, who said the Spintek sale must be "approved and consummated promptly in order to preserve the value of the assets," said Davenport "negotiated the purchase agreement without collusion and at arm's length with the trustee and is purchasing the assets in 'good faith' and ... will therefore be entitled to all the protections afforded."

"Neither the purchase of the assets by Davenport, nor the subsequent operation by Davenport of any business previously operated by Spintek, shall cause Davenport to (assume) any obligations or liabilities of Spintek," she wrote in the order.

Cory, who earlier disputed how much is owed to Davenport and secured by the intellectual property, said he decided that selling the assets to him was in the best interest of the estate and its creditors.

"While we didn't agree that the $5.738 million claim was entirely secured by the intellectual assets, we agreed that $960,000 of the claim was secured by the assets," Cory said.

Davenport, Spintek's main financing source, said he purchased equity positions and provided loans totaling about $10 million over several years to the Spintek companies, which "as start up companies ... required great infusions of capital in order to meet their cash flow needs."

Cory said the Spintek companies were closed and some 60 of their employees were laid off prior to the bankruptcy filing. Spintek Gaming Technologies reported assets of $2,510 and liabilities of $5.74 million, while Spinteknology Inc., listed assets of $4.43 million and liabilities of $7.64 million. No assets or liabilities were provided for Spintek Gaming Inc.

Cory said Davenport is allowed to use $1 million of his $5.738 million claim to buy the intellectual property and the end result is the debt is reduced to $4.738 million. "Davenport agreed to subordinate the remainder of his claim to other general unsecured creditors, which means he gets paid only after they are made whole."

He said Anchor Gaming had expressed interest in buying some of the intellectual property, but later decided not to bid against Davenport's offer.

Separately, the court also approved on March 21 Cory's request to reject Spintek's outstanding leases with several parties including Spintek's landlord.