iMedia's $50M sale is canceled; founder of 5-Hour Energy emerges as new buyer

The potential $50 million sale of iMedia Brands Inc. to RNN National Media Group is off, but a new buyer has emerged.

IV Media — a company the billionaire founder of 5-Hour Energy drink, Manoj Bhargava, owns — said Monday it is acquiring ShopHQ and its iMedia Digital Services from iMedia as part of several media acquisitions some of Bhargava's companies have made recently.

A Monday filing with the U.S. Securities and Exchange Commission indicated iMedia received a notice of termination last Tuesday canceling the deal with RNN.

Monday's SEC document indicated "the notice set forth the reason for the termination as the company's failure to meet, or inability to meet, certain bankruptcy court milestones (as defined in the purchase agreement)."

Eden Prairie-based iMedia filed for bankruptcy in late June. The company announced July 10 it would sell to RNN for $50 million.

According to a spokesman from IV Media, the bankruptcy court has approved the purchase of ShopHQ for approximately $55 million.

"We anticipate investing $20 million more," the spokesman said.

The deal should close by the end of August.

It's part of a larger media purchase Simplify Inventions, LLC — which Bhargava owns — announced. Other deals affiliates of Simplify announced Monday include an agreement to acquire a majority ownership position in The Arena Group Inc. — owners of 265 media brands including Sports Illustrated and Parade magazine — two television networks and related television stations and a major investment in radio stations.

IMedia is the parent company of TV shopping network ShopHQ, women's apparel retailer Christopher & Banks and leather goods brand J.W. Hulme Co.

IMedia reported revenue of $544.6 million and a net loss of $70 million for its fiscal year that ended Jan. 28. Its fourth-quarter sales were down 31%. The company was under heavy pressure to manage its debt load.

Mark Argento, head of institutional equities with Minneapolis-based Lake Street Capital Markets, was a longtime follower of iMedia as a public company. Argento said the surprise deal for iMedia fits in with the larger media deal.

"The thing that's attractive is the national footprint. There's a lot of different things you can do with that," Argento said of iMedia's operations.