The IAMP merger is now problematic:
"...we have been advised by IAMP's partners, this
is Cisneros Group and Hicks-Muse, that they are
evaluating their rights under the combination
agreement governing the Claxon transaction. This
includes determining whether or not they believe
conditions precedent to the closing can be
fulfilled."
freeedgar.com
The following communications contain forward-looking statements within the
meaning of the Safe Harbor Provisions of the Private Securities Litigation
Reform Act of 1995. References made in the following, in particular,
statements regarding the proposed El Sitio/Claxson Interactive Group Inc.
merger are based on management's current expectations or beliefs and are
subject to a number of factors and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements. In particular, the following factors, among others, could cause
actual results to differ materially from those described in the
forward-looking statements: inability to obtain, or meet conditions imposed
for, governmental approvals for the merger; and failure of the El Sitio
shareholders to approve the merger.
For a detailed discussion of these and other cautionary statements, please
refer to El Sitio's filings with the Securities and Exchange Commission,
especially in the "Forward-Looking Statements" section of the Management's
Discussion and Analysis section of El Sitio's Form 20-F annual report for the
fiscal year ended December 31, 1999 and the Risk Factors section of El Sitio's
F-1 filing.
* * * * * * * * * * * * * * * * * * * * * *
THE FOLLOWING IS AN EXCERPT OF A TRANSCRIPT OF A PRESS CONFERENCE HELD ON MAY
18, 2001, AT WHICH VARIOUS DEVELOPMENTS OF THE MERGER TRANSACTION WITH CLAXSON
INTERACTIVE GROUP WERE DISCUSSED:
EL SITIO INC.
Moderator: Horacio Milberg
May 18, 2001
9:00 a.m. MT
. . . . . . . . .
Horacio Milberg: Thank you. Good morning, everyone.
As indicated in the press release this morning, we
have had two important developments. The first is
that we have been advised by IAMP's partners, this
is Cisneros Group and Hicks-Muse, that they are
evaluating their rights under the combination
agreement governing the Claxon transaction. This
includes determining whether or not they believe
conditions precedent to the closing can be
fulfilled. I can make no further comments on the
situation at this time, but we intend to keep you
updated on developments regarding the transaction.
The second development is the receipt of
notification from NASDAQ that we are not in
compliance with listing requirements because our
shares have closed with a bid price under $1 for 30
consecutive days. This, of course, is a situation
we have been monitoring closely, over time, and
will continue to evaluate, going forward. It is our
clear intention to maintain the listing and the
primary way to do it, in our view, is to complete
the Claxon transaction.
. . . . . . . . .
Rob Hinchcliffe: As a follow-up to the last question -- potentially,
you're saying the merger may not happen. You're not
giving any guidance on a stand-alone basis. Is that
correct?
H. Milberg: No, I'm not saying that the merger may not happen.
On that score I think that the press release and the
comments I made are pretty self-explanatory.
With regard to the Internet revenues, per se, the
advertising revenues of the Internet, as we are not
going yet giving guidance on Claxon as a whole, we
are not intending to give isolated guidance on the
Internet revenues of El Sitio.
R. Hinchcliffe: OK. So by reading-- I'm just trying to understand
the press release. So the deal-- what you're saying,
essentially, is that the deal is going to go
forward, but the structure of the deal may change?
H. Milberg: No, I'm not saying that. Perhaps it is worthwhile
revisiting what we are saying in the release --
we've been advised by the Cisneros Group and
Hick News only just over the last few days that
they are evaluating the rights under the agreement.
They have stated that they are specifically looking
into conditions precedent to closing the deal--
R. Hinchcliffe:-- and what are those conditions?
H. Milberg: -- specifically, whether a material adverse change
has occurred as a result of the Internet financial
performance for 2001. We do not believe that an
material adverse change has occurred. Perhaps I
should mention that since the beginning-- since the
signing of the combination agreement, Roberto Vivo
has been managing the business that we've compressed
[sp] Claxon substantially as if the merger had been
completed back then in October with support of our
partners at Cisneros and Hicks-Muse, and this is
continuing today. At our end we are hopeful that
the deal will proceed towards consummation in the
near term. I guess that for the time being that's
as much as we can say on this matter.
R. Hinchcliffe: What is that-- I'm just trying to look here at the
ownership interest again of the Cisneros and
Hicks-Muse combined?
H. Milberg: That's where the combination agreement -- the
Cisneros Group and Hicks-Muse would have 66 percent
of the Claxon Interactive.
R. Hinchcliffe: What about a stand-alone basis for-- what percentage
are they on of El Sitio?
H. Milberg: Eighteen percent.
R. Hinchcliffe: And in the voting rights? I mean, obviously, if they
don't want this deal to go forward, what can they do?
Legally, can they pull the plug?
H. Milberg: I really can't comment on that. The combination
agreement establishes the rights of the parties to
the agreement, I think, in pretty good detail, and
I would like you to look into that and draw your
conclusions.
R. Hinchcliffe: And who determines-- I mean-- a 75-percent
sequential decline in advertising revenues, I mean,
you know, would seem to be would be materially
adverse, you know, conditions. How is that
determined? Do you know? What's material.
H. Milberg: Again, all this is governed by the merger agreement,
and I invite you to look into the provisions of the
merger agreement.
R. Hinchcliffe: No, but my question is -- who would determine
whether or not-- whether or not it's a material
adverse decline?
H. Milberg: I am not a lawyer, and I think it would be imprudent
for me to interpret the agreement in terms of how
that determination would come about.
. . . . . . . .
R. Hinchcliffe: Hi. I don't mean to be difficult, but what about the
possibility-- I mean-- given the fact that you have
40 million in cash, what about the possibility of
just closing down and giving the dollar per share
back to the shareholders?
H. Milberg: It's an interesting idea, Robert. We are looking
at the situation as a temporary change-- not change
of plans-- but a temporary interruption in the
process. We keep on working closely with our
partners at Hicks and Cisneros, and we are
confident, as I said earlier, that this is going to
be resolved in the short run.
[inaudible] -- contemplating anything other than
reaching the formation of Claxon and keep on doing
what we have been doing since October-- since
November after the combination agreement was
signed, which is to run the Claxon-- the businesses
that compose Claxon after the merger had been
affected on October 31st. If it were because El
Sitio was a public company that required all these
regulatory matters, this would have been signed a
long time ago, but we've been working as if this
had been Claxon for the last six months. We see no
reason, at this juncture, to change that.
R. Hinchcliffe: No, but I mean, the big difference, though, is
that if I was Cisneros and Hicks-Muse, I mean,
clearly, when you're looking at the business model
a year ago and then versus now, I mean, with the
huge decline in your advertising revenues, I mean,
it's a different ballgame in terms of valuation or
in terms of, if nothing else, the structure of the
deal, big time.
H. Milberg: Well, and there is a combination agreement that
establishes the rights of the parties, and we look
at that agreement to govern what is going to happen,
going forward.
R. Hinchcliffe: Was there a breakup fee?
H. Milberg: No, there is no breakup fee. |
