RRRR: Rare Medium Group (soon to be) formerly ICC Message Board

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Technology Stocks : RRRR: Rare Medium Group (soon to be) formerly ICC

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To: Mad2 who wrote (288)	4/23/1999 8:08:00 AM
From: Rajiv	Read Replies (1) of 1150

how much equity, warrants and else will Appollo receive for their 75 big ones? From the press release - NEW YORK, April 15 /PRNewswire/ -- Apollo Management, L.P. and Rare Medium Group Inc. (Nasdaq: RRRR - news), raremedium.com, today announced that they have signed a letter of intent under which Apollo affiliates will invest $75 million of equity into Rare Medium in a transaction that will transform the company into a one-stop provider of venture capital, Internet solutions and professional services. This is among the largest single private equity investments ever made in an Internet company by one investor. Following the closing, Apollo will be Rare Medium's largest single shareholder with an ownership stake of approximately 25% on a fully diluted basis. As part of the transaction, Apollo is expected to have the ability to increase its position to approximately 40% through the exercise of warrants that have the potential to bring an additional $75 million of capital into the company. --------------------------- This is a letter of intent. I don't think it guarantees that Apollo will invest 75 MM. I am somewhat skeptical of this. RRRR is a company which has no cash at the moment and has been forced to do convertible financing. It does not even meet the net tangible assets requirement for continued listing on the Nasdaq. If we assume that Apollo will really invest the 75 MM, based on the PR - At the moment, the # of outstanding shares on a fully diluted basis is around 32 million. A 25% stake on a fully diluted basis would involve around 10 million shares. This means that Apollo is supposedly going to buy 10 million shares for 75 MM - $7.5/share approx. They will also get warrants for another 10 million shares. Does this sound reasonable? It does not... considering that they are getting a minority stake in a company which has no proprietary tech and has -ve stock equity. They can replicate the RRRR infrastructure for a fraction of what they are supposedly paying (more than 50% premium to the average price in March/early-April). Regards. Rajiv

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