Sonicblue CEO Ousted After Loan Dispute

Ken Potashner said Sonicblue Inc. ousted him as chief executive and chairman over an ultimatum he made that board members repay their sweetheart loans early or resign.

Potashner said he was fired from the maker of Replay TV after describing his boardroom confrontation on the issue to a newspaper.

Potashner’s immediate replacement, interim CEO L. Gregory Ballard, denied that the loan dispute was behind the ouster but said the board would reevaluate the loans now that investors are scrutinizing accounting at many companies. He refused to discuss the board’s reasons for the dismissal.

Potashner and other board members received loans from the company to purchase stock in RioPort Inc., a company partly owned by Sonicblue that has yet to go public. Only Potashner is required to repay his loan with interest.

The loans to Sonicblue board members were not illegal when they were issued in June 2000.

Nor were such loans uncommon--server maker Sun Microsystems Inc. disclosed Friday that it loaned $6.4 million to six executives and board members in 2001 and this year, of which $5.4 million was outstanding.