PEOP up in AH on financing news: .44 x .45.
biz.yahoo.com
Tuesday December 18, 5:29 pm Eastern Time
Press Release
SOURCE: PeoplePC
PeoplePC Receives $33 Million of Equity Investment and Commercial Commitments
SAN FRANCISCO--(BUSINESS WIRE)--Dec. 18, 2001--PeoplePC (Nasdaq:PEOP - news), a leading provider of connectivity solutions to individuals and organizations, announced today that it has closed a $21.9 million private placement of Series B preferred shares. Existing shareholder, Softbank Capital Partners, led the investor group in the financing round. Each of the Series B preferred shares will convert into 100 shares of the Company's common stock. The price of the Series B preferred shares was $5.00 per share. The conversion of the Series B preferred shares will occur automatically upon shareholder approval of the transaction. Shareholders holding a majority of the outstanding common shares have agreed to vote their shares to approve the transaction. Upon conversion, the Series B preferred shares will represent approximately 75% of the Company's common stock.
Concurrently, PeoplePC announced that it has obtained approximately $11.2 million in funding arising out of commercial transactions and relationships, including a new long-term relationship with a major telecommunications company. Of this amount, approximately $7 million will be payable within 6 months, and the remainder is payable over the following 14 months.
The company has been aggressively reducing its operating costs over the past year, bringing costs down over 45 percent since the second quarter of 2001. Looking forward, the company envisions continued emphasis on cost control, targeting an additional 20 percent reduction before the end of the year through incremental operational and organizational cost reduction measures.
``This funding is a significant vote of confidence from our investors, especially in this tough economic climate,'' said Nick Grouf, President and Chief Executive Officer of PeoplePC. ``We recognize the importance of reaching cash flow breakeven and profitability. With this capital, we have the runway to implement our business plan.''
``We have had a long relationship with PeoplePC and this is a demonstration of our continued belief in the management team and the company. This investment is consistent with our overall approach of supporting portfolio companies that we believe to have attractive and scalable business models,'' said Ron Fisher, Managing Partner of Softbank Capital. ``There is a very large market for PeoplePC's corporate and institutional connectivity solutions and we're committing significant resources to support PeoplePC's growth and success.''
Mr. Fisher, who has been a member of the PeoplePC board since 1999, will assume the additional responsibilities of Chairman.
The Series B investors have entered into lock-up agreements prohibiting any sale or hedging transaction in the Series B preferred shares and the underlying common stock until six months after the date of closing; however, the effectiveness of these agreements is conditioned on the agreement of certain employees and directors to similar lockups. The investors have also agreed that for a one-year period, they will not seek to acquire additional shares of PeoplePC stock without the company's consent.
In conjunction with the transaction, the investor group and PeoplePC agreed to replenish the pool of shares reserved for the company's stock option plans, and to make new option grants to current employees.
PeoplePC, Inc. trades on the NASDAQ National Markets under the ticker symbol PEOP.
About PeoplePC
Founded in early 1999, PeoplePC is a leading provider of Internet connectivity solutions. PeoplePC works with Fortune 500 companies, such as Vivendi-Universal (NYSE: VU - news), The Ford Motor Company (NYSE: F - news), Delta Air Lines (NYSE: DAL - news), The New York Times Company (NYSE: NYT - news), Bertelsmann AG, and Ingersoll-Rand (NYSE: IR - news), and other organizations, like AAA and Blue Cross/Blue Shield, to create digital connections with their constituencies, including employees, partners, customers, salespeople, and members.
With nearly 7,000 dial-up numbers, PeoplePC has the largest dial up network in the U.S. The company delivers access to 13% more area codes than Microsoft's MSN (NASDAQ: MSFT - news) and 8% more than America Online (NYSE: AOL - news). Further, the company offers 18% more dial-up numbers than AOL and MSN combined. This network allows PeoplePC to offer users unparalleled coverage, capacity, reliability, and redundancy.
PeoplePC provides complete, simple, and affordable digital solutions so people around the world can enjoy everything technology has to offer without any of the worry. For more information, visit peoplepc.com
This press release contains forward-looking statements that are subject to the assumptions, risks, and uncertainties discussed below. Actual results may vary from those projected in the forward-looking statements. If the Company's assumptions about the future do not materialize or prove to be incorrect, the Company's results could differ materially from those expressed or implied by such forward-looking statements. A forward-looking statement is any statement that looks to future events, including any projections of earnings, revenues, or other financial items; any statements of plans, strategies and objectives of management for future operations; any statements regarding proposed new products, services, business opportunities, or developments; any statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing. In addition, the above forward-looking statements depend on assumptions relating to our ability to expand our membership and enter into new enterprise agreements, our ability to provide consumer financing for the purchase of our products and services, the willingness of third party vendors to provide products and services on acceptable terms, our ability to meet our obligations under enterprise agreements, the containment of the costs of providing products and services, the containment of customer acquisition costs, our ability to generate revenues from merchant partners, our ability to generate, through operating revenues or through the proceeds of equity or debt financing, sufficient cash to implement our business plan, competition, international expansion, and other risks described from time to time in PeoplePC's Securities and Exchange Commission periodic reports and filings. The Company assumes no obligation to update these forward-looking statements to reflect events that occur or circumstances that exist after the date on which they were made. Further information on potential factors that could affect these forward looking statements and the company's financial results are included in our filings with the Securities and Exchange Commission.
Note to Editors: PeoplePC and its logos are among trademarks of PeoplePC, Inc. in the U.S. and other countries. All other trademarks belong to their respective holders.
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Contact:
PeoplePC, Inc.
Lisa Murray, 415/901-6987
lmurray@peoplepchq.com |
