Final nail in the coffin for EToys.
eToys Announces Additional Cost Reduction Efforts, Extension of Standstill Agreement, Notice of Possible Delisting Within 90 Days
Business Wire - February 05, 2001 16:48
LOS ANGELES--(BUSINESS WIRE)--Feb. 5, 2001--eToys Inc. (NASDAQ: ETYS) today announced that it provided job elimination notices to an additional 293 employees located in its Ontario, Calif. and Blairs, Virginia distribution centers. These employees are scheduled to end their employment with the company on April 6. On January 4, the company announced it had provided job elimination notices to approximately 700 of its employees. With today's action, the company has now issued job elimination notices to all of its employees, with service dates continuing up to April 6.
The company reiterated that it anticipates that its current cash, cash equivalents and cash that may be generated from operations will be sufficient to meet its anticipated cash needs to approximately March 31, 2001, although there can be no assurance in this regard. In order to continue operations in 2001, the company will require an additional, substantial capital infusion. eToys said it does not believe that additional capital will be available to the company.
The company also reported that its standstill agreement with an informal committee of its unsecured creditors has been extended to February 15. Under the agreement, through and including February 15, the committee members have agreed to forebear from taking any action to collect on their debts, and the company has agreed not to pay any past due debts and to operate under a budget designed to maintain its current operations. During this extended period, the committee will continue to evaluate the company's assets and marketing strategy and explore the possibility of recommending to the creditor constituency acceptance of an out-of-court workout agreement between the company and all of its creditors.
The company continues to work with Goldman, Sachs & Co. as its financial advisor to explore a range of strategic alternatives, which may include a merger, asset sale or another comparable transaction or financial restructuring.
The company also stated that it has received a notice from NASDAQ that its common stock has failed to maintain the required minimum bid price of $1.00 over a period of 30 consecutive trading days. As a result, NASDAQ has provided the company with 90 calendar days, or until May 2, 2001, to regain compliance with this requirement or be delisted from trading. The company believes it is unlikely that it will be able to regain compliance with this requirement during this time period and that, by the end of this time period, its securities will be delisted from trading by NASDAQ.
Forward-Looking Statements
Statements made in this document that are forward-looking involve risks and uncertainties that could cause results to differ materially from those expressed. Such risks and uncertainties include, but are not limited to, the company's expectation of operating losses and negative cash flow for the foreseeable future. There can be no assurance regarding when or if the company will achieve profitability; whether the company will be able to consummate any of its potential strategic alternatives on acceptable terms or at all; or whether the company's proposed workforce reduction will positively impact its future results of operations. Other risk factors include the company's limited operating history, unpredictability of operating results, seasonality, inventory risk, reliance on key vendors and distributors as well as the competitive marketplace. Other risks are set forth in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2000, under the heading "Business - Additional Factors That May Affect Results," in the company's quarterly reports on Form 10-Q for the quarters ended June 30, 2000 and September 30, 2000 and in the company's other filings with the Securities and Exchange Commission.
CONTACT: eToys Inc., Los Angeles
Ken Ross, 310/998-6993 (media)
kross@etoys.com
Gary Gerdemann, 310/998-6823 (media)
ggerd@etoys.com
Clem Teng, 310/998-6312 (investors)
cteng@etoys.com |
