Verticalnet (NASDAQ:VERT)
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Verticalnet, Inc. (Nasdaq:VERT), a leading provider of on-demand supply
management solutions, today announced completion of a private placement
of $2.175 million in preferred stock financing, including $1.575 million
in new capital and the conversion of $600,000 of debt financing
previously announced on May 22, 2007. Kildare Capital, Inc. acted as
exclusive placement agent for the Company.
Several individual and institutional investors invested $2.175 million
and the Company agreed to issue to the investors 8,700,000 shares of
Series B Preferred Stock. The total transaction resulted in net proceeds
to the Company of approximately $1.95 million after deducting the
estimated offering costs and fees. The transaction provides that
$600,000 of debt loaned to the Company in early May will automatically
convert into the Series B Preferred Stock on a dollar-for-dollar basis.
The Company intends to use the proceeds of the transaction for working
capital, the repayment of its final two payments of senior secured
convertible notes, and the partial repayment of the Company’s
subordinated discount note.
The Series B Preferred Stock includes an interest rate of 12% per annum,
payable in kind, and is subject to redemption at the investor’s
discretion after 24 months. The Company has agreed to seek at its annual
meeting shareholder approval of a proposal to enable all the Series B
Preferred Stock to be convertible into common shares, to allow Series B
shareholders to be issued 4,350,000 warrants to be priced at the closing
Nasdaq bid price on the day prior to the Closing and 4,350,000 warrants
to be priced at $.70. Under the terms of the proposal, investors would
be entitled to convert their shares of Series B Preferred Stock into
common shares on a one-for-one basis, subject to adjustment based on
subsequent financing criteria set forth in the terms of the Series B
Preferred Stock. Upon achieving shareholder approval, all accrued
interest on the Series B Preferred Stock would be deemed paid and the
redemption feature would be eliminated. In the event the shareholders do
not approve the proposal to enable all the Series B Preferred Stock to
be convertible into common shares, a portion of the Series B Preferred
Stock equal to 19.9% of the Company’s
outstanding common stock will be convertible into the Company’s
common stock, the redemption feature and interest will be retained and
the holders of the Series B Preferred Stock will be granted warrants to
purchase approximately 27.0 million shares of the Company’s
common stock at an exercise price to be set on the day prior to the
annual shareholders meeting.
"Verticalnet is pleased to announce the infusion of additional capital
from a mix of respected long-term investors as well as members of
Verticalnet’s Board of Directors and
co-founder," stated Nathanael Lentz, president and CEO of Verticalnet.
"With this additional liquidity, the elimination of our senior
convertible debt in early July, our continued focus on cost management,
and our continued success in the market place, we believe that we are
setting in motion the right actions for the next chapter in Verticalnet’s
evolution."
Neither the shares of Series B Preferred Stock nor the shares of common
stock issuable as a result of any conversion of the Series B Preferred
Stock have been registered under the Securities Act of 1933 and may not
be subsequently offered or sold by the investors absent registration or
an applicable exemption from the registration requirements. Verticalnet
has agreed to file a registration statement covering the resale of the
shares of common stock issuable upon conversion of the Series B
Preferred Stock issued in this transaction and upon exercise of the
warrants to be issued in this transaction.
About Verticalnet, Inc.
Verticalnet is a leading provider of on-demand supply management
solutions that enable companies to identify and realize sustained value
across the supply management lifecycle. Going beyond traditional spend
management and sourcing approaches, Verticalnet’s
solutions provide the visibility, insight and process control required
to maximize the sustained value realization from supply management.
Large enough to help customers attain supply management success
worldwide, yet nimble enough to provide individual attention and remain
focused on customer priorities, Verticalnet is helping Global 2000
companies and mid-market enterprises move their supply management
efforts to the next level through an optimal blend of software,
comprehensive services, and deep category knowledge and domain expertise.
Cautionary Statement Regarding Forward-Looking Information
This announcement contains forward-looking information that involves
risks and uncertainties. Such information includes statements about
elimination of our senior convertible debt, continued focus on cost
management, and continued success in the market place , as well as
statements that are preceded by, followed by or include the words “believes,”
“plans,” “intends,”
“expects,” “anticipated,”
“scheduled,” or
similar expressions. For such statements, Verticalnet claims the
protection of the safe harbor for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995. Actual results
may differ materially from the results predicted, and reported results
should not be considered as an indication of future performance. Factors
that could cause actual results to differ from those contained in the
forward-looking statements include, but are not limited to, the
continued availability and terms of equity and debt financing to fund
our business, our reliance on the development of our enterprise software
and services business, competition in our target markets, our ability to
maintain our listing on The Nasdaq Capital Market, economic conditions
in general and in our specific target markets, our ability to use and
protect our intellectual property, and our ability to attract and retain
qualified personnel, as well as those factors set forth in our Annual
Report on Form 10-K for the year ended December 31, 2006 and the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 which
have been filed with the SEC. Verticalnet is making these statements as
of June 4, 2007 and assumes no obligation to publicly update or revise
any of the forward-looking information in this announcement.
Verticalnet is a registered trademark or a trademark in the United
States and other countries of Vert Tech LLC