Standard buys out partner Iceberg Media as radio webcaster gives up on markets

Iceberg Media.com Inc. is supporting a $1.3-million takeover by Standard Radio Inc. as the only alternative to shutting its doors. On May 22, the company announced that Standard would be tendering an offer to purchase all outstanding shares at $0.05 each, a measure already agreed to by Iceberg and partners Newfoundland Capital Corp. and Universal Studios Canada Ltd. It’s expected that CHUM Ltd., which owns 16.5% of Iceberg, will also tender its shares as part of the takeover. Though Iceberg maintains a healthy $3.8 million war chest, and has consistently managed monthly operating expenses on a strict basis since going public, company president and CEO Ted Boyd tells Canadian NEW MEDIA it would rather sell than continue on uncertain ground. He says the company is currently operating on about $300,000 per month – reduced from the steady $400,000 it had been spending in the run-up to the proposed takeover. Though expenses have been carefully controlled, Boyd says the company knew about six months ago that it would have to seek an alternative to re-financing to keep the company afloat, and that it was facing a deadline of between October and December 2002 to find further operating funds. Advertising dollars have not flowed into the company according to plans drawn up in the heyday of Internet expectations, and the company’s existing shareholders are fully aware that public markets are unlikely to pump any further funds into the organization. Boyd, however, remains convinced that the business will eventually succeed according to initial expectations. "As frothy as times were two years ago, we’ve gone too far the other way now," he says of the public markets’ reluctance to invest in pre-profit, Internet ventures. Boyd says senior executives from the company are expected to be retained. For his part, Standard president and CEO Gary Slaight won’t comment on how the Iceberg operation will be integrated into the operations of the second-largest radio broadcaster in the country. Until the deal is done, it’s premature to comment outside of a May 21 media release, he tells CNM. A takeover bid circular was to have been mailed to Iceberg shareholders by May 27. Both a special committee of Iceberg’s directors and Griffiths McBurney & Partners have found the offer fair. Standard won’t find itself on completely unfamiliar turf. Though the company hasn’t, until now, been an Internet player, the broadcaster has been working closely with Universal Music, and the acquisition will allow the company to further reduce overhead as some services are brought in-house. According to the company’s latest financial results, released May 21, Iceberg was able to increase revenue for fiscal 2001 to $744,000 from $268,000 in the previous year, which was "significantly less than anticipated." The company also wrote off $1.1 million worth of advertising inventory acquired in a deal with CHUM and computer software and equipment that were the result of Iceberg’s acquisition of Bonzaroo.com (CNM, Nov. 29/01). Its net loss for the year was $7.6 million, or $0.31 per share. If the takeover deal is finalized, Standard will assume control of $877,593 in current liabilities, of which $720,172 is related to accounts payable and accrued liabilities. Should the acquisition not proceed, it’s unlikely much of value will remain. The company no longer attaches any dollar figure, at least on the books, to a proprietary back-end infrastructure that targets advertisements to listeners that CHUM developed for its Bonzaroo property. As well, at the going rate of $0.10 on the dollar for liquidated goods from dot coms, it’s unlikely the company would recoup much more than $100,000 from computers and furniture in a fire sale. Iceberg’s stock, which had traded as high as between $3.50 and $3.75 in the summer of 2000, has been priced at below $0.50 since the spring 2001 telecom bust, and has most recently been trading in the penny stock range.

Standard buys out partner Iceberg Media as radio webcaster gives up on markets

News | 05/31/2002 4:00 am EDT

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