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Technology Stocks : Liquid Audio Inc - (Nasdaq- LQID) -- Ignore unavailable to you. Want to Upgrade?

To: jlib who wrote (661)	10/22/2001 10:31:37 PM
From: Glenn Petersen	Read Replies (1) \| Respond to of 674

Steel Partners offers to buy Liquid Audio By Ben Berkowitz LOS ANGELES, Oct 22 (Reuters) - A dissident investor in Liquid Audio Inc. <LQID.O> has offered to buy the struggling online music services firm for $67.8 million in cash, saying the step was needed to protect the remaining value of its investment in the face of poor management. New York-based Steel Partners II, a privately held equity fund, made an unsolicited offer to pay $3 per share for Liquid Audio, a 27 percent premium over Liquid's closing price of $2.36 on Nasdaq on Monday. "We believe that there is significant, but rapidly diminishing value inherent in the business and assets of Liquid Audio despite the company's poor operating performance and declining share price," Steel said in what was described as an open letter to the company's management. A spokesman for Liquid Audio said the company's board of directors had not received the offer and was not yet treating it as a formal bid. Steel, which was not immediately available for further comment, said it held about 8.2 percent of the common stock of Liquid Audio, up from 7.8 percent in September. Monday's bid for the struggling online music came after the fund sent sent a letter to Liquid Audio on Sept. 10 demanding that management put the company up for sale. Steel called Liquid's strategy "doomed" in the face of competition from the likes of RealNetworks Inc. <RNWK.O> and Microsoft Corp. <MSFT.O>. In a subsequent development, Musicmaker.com and some of its executives said they had acquired 6.3 percent of the company and would seek to acquire another 8.6 percent, taking their stake to 14.9 percent. The group also said it would increase its ownership stake in Liquid to as much as 25 percent if the company dropped a shareholder rights plan, which attempts to prevent anyone from acquiring more than 15 percent of the company. As of Monday's close, Liquid Audio had a market capitalization of $53.3 million. At its peak, in November 1999, the company was worth over $1 billion. On Aug. 9, Liquid Audio reported second-quarter results, showing a decline in revenue to $1 million from $1.7 million in the prior quarter and $3.5 million in the year-earlier quarter. The company's net loss widened to $14 million, or 62 cents per share, compared with $7.7 million, or 35 cents per share, in the year-earlier period. At least three class action suits by shareholders are pending against the company, alleging that Liquid Audio and the underwriters of its initial public offering failed to disclose the exchange of certain shares in the IPO for commission payments. In mid-July Liquid Audio severed ties with Liquid Audio Japan, its Tokyo-based licensee. The Japanese license was worth $11.6 million in revenue in 2000 to Liquid Audio. Liquid Audio Japan had been dogged by the criminal investigation of a former executive and a collapse in its share price after a widely watched public offering on the Tokyo Stock Exchange's Mothers market in 2000. Gerry Kearby, Liquid Audio's chief executive, told Reuters in July that it would take over a year to recoup the lost sales from the severing of ties to the Japanese company. 19:11 10-22-01

To: jlib who wrote (661)	4/23/2002 12:16:40 PM
From: Glenn Petersen	Read Replies (1) \| Respond to of 674

Steel Partners II, L.P. Sends Letter to Liquid Audio, Inc. Board of Directors biz.yahoo.com Wednesday April 17, 3:00 pm Eastern Time Press Release SOURCE: Steel Partners II, L.P. BEVERLY HILLS, Calif.--(BUSINESS WIRE)--April 17, 2002--Steel Partners II, L.P., which owns approximately 8.2% of the common shares of Liquid Audio, Inc. (NASDAQ: LQID - news), announced today that it sent the following letter to the company's Board of Directors: STEEL PARTNERS 150 SOUTH RODEO DRIVE SUITE 100 BEVERLY HILLS, CALIFORNIA 90212 April 16, 2002 The Board of Directors Liquid Audio, Inc. 800 Chesapeake Drive Redwood City, CA 94063 Ladies and Gentlemen: Steel Partners II, L.P., the largest shareholder of Liquid Audio, Inc. (the "Company"), remains alarmed by the continuing cash burn of the Company and the Board of Directors' apparent indifference to the many important issues raised by the musicmaker.com group and other shareholders of the Company. We fear that the Board intends to allow management to continue to pursue its flawed business plan and potentially waste hundreds of thousands of dollars on a protracted proxy fight with the musicmaker.com group at the next annual meeting of shareholders. Because we are convinced that shareholders will overwhelmingly elect musicmaker.com's slate of directors, we propose that the Board ask Seymour Holtzman and James Mitarotonda to join the Board now and not waste more money on a pointless proxy fight. Additionally, we believe it would be embarrassing to the Company and its shareholders if Gerald Kearby, Chairman, Chief Executive and Co-Founder and Robert Flynn, Senior Vice President and Co-Founder lose the election by such a wide margin. An alternative for enhancing shareholder value would be to declare a $3.00 per share cash distribution to all shareholders, a suggestion we have made many times. As per the guidance issued by management on their most recent conference call, the Company had a cash balance of approximately $85 million as of March 31, 2002, or $3.75 per share. If the Board declared this $3.00 per share cash distribution, the Company would have approximately $17 million to pursue its business strategy. We firmly believe that if the Company cannot operate on this budget, then the Board must acknowledge the business plan is severely flawed and should immediately explore other options such as selling the Company to the highest bidder. Recently, we reiterated our suggestion to the Company and its advisors and were told that a cash distribution would not solve the Company's "problem" which is the large ownership by unhappy shareholders; in simple terms, a cash distribution will not get rid of the dissatisfied owners. The Board should understand that by making this distribution, many of the current issues raised by shareholders are likely to go away. Instead of wasting valuable cash on a business plan destined for failure and an unwinnable proxy fight at the shareholders' expense, we suggest that you should immediately focus on maximizing shareholder value. Finally, we remain perplexed as to why directors or officers have not acquired a greater stake in the Company when its shares trade near an all-time low and at a 62% discount to its cash balance as of April 15, 2002. Why should we have any confidence in the Board when it has such nominal ownership in the Company? We suspect the answer is that it lacks confidence in its own business plan. We believe by inviting musicmaker.com's slate of directors to join the Board and making a $3.00 cash distribution, all shareholders will benefit. If neither of these alternatives is palatable to you, we ask that you hold the annual shareholders meeting immediately and allow the shareholders to promptly decide the appropriate fate of the Company. We ask that you act responsibly by not frivolously wasting shareholders' money on a proxy contest that is very likely a fait accompli. If you would like to further discuss any of the above ideas, please call me at (310) 246-3741. Very truly yours, Josh Schechter Steel Partners -------------------------------------------------------------------------------- Contact: Steel Partners II, L.P. Josh Schechter, 310/246-3741