EarthLink gets $15 million

Allaying concerns that it was running out of cash, EarthLink Network (ELNK) said today that financier George Soros has increased his stake in the company.

The company announced that it has secured $15 million through a private placement of unregistered shares of its common stock. The lead investor was Soros Fund Management through its Quantum Industrial Partners, which purchased $5 million of common stock in the offering.

The funding will enable EarthLink to continue expanding its operations as it continues to strive towards profitability. The company is spending to build its infrastructure and develop new services and products.

Concerns about the company's resources were raised last month when the Internet service provider stated in a SEC filing that its finances may run a bit thin. It added that it expected losses to continue at least through the end of 1997. The company later revised its comments, saying the initial statement was just "being conservative." In its revised SEC filing, the EarthLink said: "The company believes that available cash will be sufficient to meet the company's operating expenses and capital requirements through the end of this fiscal year."

After the SEC confusion, the stock fell about 15 percent to $10 a share. Since then, it has gained nearly 50 percent to yesterday's close of 14-7/8.

The shares sold in the private placement, which are nonvoting, were priced at market value of $10.75 each, said Kirsten Kappos, EarthLink vice president of corporate communications. Additional investors included existing shareholders, as well as EarthLink's directors and management.

Soros now has a stake of just over 10 percent the company, said Kappos. The company has 9.73 million shares outstanding, and Soros holds about 970,000.

"This private financing demonstrates the confidence investors have in EarthLink's business model, and it provides capital to continue to fund EarthLink's growth," CEO Charles Betty said in a prepared statement today.

In the company's most recent quarterly report, it recorded a net loss of $7.8 million, while its revenue grew to $18.8 million, from $8.1 million in the same quarter a year earlier.