May 10, 2000 7:35 PM PDT
Value America receives influx of cash
Besides Allen, the group of existing investors that reinvested $30 million into Value America and received a new issue of preferred stock, was Pacific Capital Group, Federal Express and that company's founder Fredrick Smith, a statement released by Value America said. Allen invested in Value American through Vulcan Ventures, his venture capital division.
Acqua Wellington North America Equities Fund, which manages a diversified fund, bought $60 million worth of Value America stock at a "small discount to market prices," Value America said.
Value America is the latest in a group of former 1999 IPO hits that have narrowly averted insolvency this year. Peapod, CDNow and Drkoop.com were all running low on cash before auditors finally expressed doubts about their ability to continue doing business. This is the year that analysts predicted would see scores of companies getting acquired or shutting their doors.
A former Net darling as recently as last year, when Charlottesville, Va.-based Value America's initial public offering was warmly greeted by a public hungry for dot-com ownership, the company has now clearly fallen from grace on Wall Street. On its opening day last April, the share price skyrocketed to $74.25, up from its original asking price of $23.
Since its heady days as a Net IPO high-flyer, however, the company's stock price has continued to drop. At the close of market today, Value America's share price sunk to $1.97 and has been as low as $1.56.
Signs of trouble came last December when Value America announced massive layoffs, co-founders Craig Winn and Rex Scatena were leaving the company and that it would report a significant shortfall in earnings.
The company has attempted to rally. Under chief executive officer Glenda Dorchak, Value America has implemented cost-cutting measures and scaled back the company's product offerings.