Threshold Near Recovery, Says National Manager

Holding his thumb and forefinger together to reveal barely a sliver of light, Chris English said, "This close. We're this close." He wasn't talking about how far apart we were sitting, but about how close Threshold is to being back in business after an attempted restructuring last year did not work out.

A household name among audiophiles for two decades, Threshold went into limbo in January 1998, when crushing debt and slumping sales due to the Asian economic crisis drove it and sister company PS Audio into the ground. Randy Patton was the principal owner of both companies at the time, having purchased PS Audio using Threshold as collateral. The PS name has since been spun off and re-acquired (and revived, we are told) by one of its founders, Paul McGowan.

Threshold is in a similar process, according to English. The company's former national sales manager---and probable vice president of sales and marketing, if all goes according to plan---met me at Rabata, a delightful Japanese restaurant in Mill Valley, during a tour of Northern California audio dealers.

"The company was heavily in debt as a result of several unsound decisions that had been made along the way," he explained. "It eventually got to the point where we couldn't buy parts or pay salaries. It got so bad that at CES that year, Randy and I came to a serious parting of ways. I had months of vacation time due me, and I took it."

English set himself up as an independent consultant and began working with several other audio manufacturers. Meanwhile, both PS Audio and Threshold ceased doing business, creditors obtained their remaining assets, and Randy Patton bailed out. English, however, who had invested many years in the company, was unwilling to see Threshold disappear or have its name sold off to a mass marketer, as has happened to other high-end brands.

English and partner Ed Woodard, a longtime behind-the-scenes-player in the audio industry, worked closely with Threshold's creditors to ensure the company's survival. English continued the story: "Ed managed to convince everyone involved that selling off Threshold as salvage wouldn't yield anywhere near enough money to satisfy the outstanding debt---well in excess of $600,000. The long and the short of it is that the PS Audio people got some satisfaction, and the bank walked away and wrote it off as bad debt. We were able to buy the company for a token sum." He diplomatically declined to mention the price.

Acquiring the name debt-free was a major coup, but revitalizing the company is an arduous process involving lining up investors, setting up production, and re-establishing relationships with dealers---all reasons for English's current tour. "We are close to having our start-up capital," he said with a grin. "Just a few more people to talk to, and we should be over the top."

Production will be moved from Southern California to South Carolina, near Clemson University, where warehouse space costs less than a third what it does on the West Coast. "We plan to take advantage of the tremendous talent pool at Clemson. Many of our raw parts---chassis and heatsinks, metalwork and transformers---will be sourced locally, which will result in huge cost savings." Atlanta, a major business center with a huge modern airport, is only two hours away by car. Many high-tech manufacturers have set up plants in South Carolina, prominent among them automaker BMW.

"Dealers are eager to see us back in business," English noted. "At least 90% of our former dealers have expressed support, and many others have made inquiries. Some have even asked about investing. The distribution network is basically intact."

Threshold's product line will consist primarily of amplifiers and preamps, which have always been the company's strong suit. "The T-series will be revived," English emphasized, "in particular the T2 and T3 preamps. The output sections of T-series power amps are being redesigned for normal bipolar transistors. The IGBTs [insulated-gate bipolar transistors] we were using before are no longer available."

In addition to two-channel high-end products, English wants to introduce a "high-value" line including an integrated amplifier, and multichannel amps for the home-theater market. "We aren't going to make transports or processors," he said. "There are too many other people doing that for it to make sense for us. Threshold is going to concentrate on doing what it has always done best."

Stereophile's HI-FI '99 Show, in Chicago in May, is too soon to expect any prototypes, but next year's Consumer Electronics Show could see a full line of Threshold products. By this time next year---if the last few pieces of the puzzle fall into place---a company that was recently at death's door may be alive and kicking. According to Chris English, the chances of that happening are very good indeed.

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