Boy Wonder at eUniverse Quits As Investor Group Raises Profile
WALL STREET WEST
The youthful mastermind behind eUniverse Inc. has stepped down from his executive role just three days before the former Internet high-flyer announced a new financing deal.
As a 20-something UCLA graduate, Brad Greenspan had assembled a hodgepodge of Internet assets into a thriving public company with big-name investors such as Sony Corp., then managed to survive the dot-com bust. But Greenspan's and eUniverse's fortunes have fallen since early May, when it announced that it would have to restate three quarters of financial results. That resulted in a nearly four-month halt in the trading of its stock.
The accounting problems had already led to the replacement of eUniverse's auditor in May and the resignation of Chief Financial Officer Joseph Varraveto in September.
On Oct. 31, the company announced without explanation that Greenspan had stepped down as chief executive and as chairman, although he will remain on the board.
Then on Nov. 3, the company said VantagePoint Venture Partners had invested $8 million in the company. In turn, the San Bruno-based venture capital outfit received 5.3 million Series C preferred shares that, along with a previously announced investment, could give VantagePoint a 30 percent stake in the company upon conversion.
Prior to VantagePoint's investments, Greenspan held a 28.2 percent stake in eUniverse, according to filings with the Securities and Exchange Commission.
As part of the firm's latest investment, VantagePoint managing directors David Carlick and Andrew Sheehan took two seats on the eUniverse board. Two other new directors joined the board, including entrepreneur Jeffrey Edell, who replaced former Sony executive Thomas Gewecke.
"Brad led our team through some very exciting times, and we are thrilled at all we've been able to accomplish," said eUniverse President Brett Brewer in a press release.
Brewer will take over Greenspan's executive duties until the board completes a search for a permanent replacement. Brewer ran the company's CD Universe division, which has since been sold, before becoming eUniverse's president three years ago.
EUniverse spokesman Chris Scanlon had no comment on Greenspan's departure. Calls to Greenspan were not returned.
Wealthy Are Outraged
The wealthiest people in America want more stringent laws and regulations applied to corporate executives, public companies, independent auditors and stock analysts.
An annual survey by U.S. Trust Co., a unit of discount brokerage firm Charles Schwab & Co., found that 79 percent of America's most affluent "question the reliability" of corporate financial statements. Eighty three percent believe there is an inherent conflict of interest in investment banks providing services to both corporations and individual investors.
The phone interview asked questions of 151 of America's wealthiest people, who make up less than 1 percent of the population and have an adjusted gross income of more than $325,000 annually or a net worth greater than $5.9 million.
Ninety-two percent of those polled suggested increased vigilance by corporate boards over management, while 85 percent called for more stringent laws and regulations of public companies and their executives.
Hauser Inc., the troubled El Segundo supplement firm, has finally completed a key sale of its primary business unit in an effort to emerge from bankruptcy but there will be little left of the company if it does.
Zuellig Botanicals Inc., a subsidiary of Zuellig Group N.A. Inc., has agreed to purchase the assets of Hauser's Long Beach-based dietary supplement trading business for at least $8.2 million, with the proceeds helping to pay off $8.6 million in secured debt owed to Wells Fargo Bank.
The sale still must be approved by a U.S. Bankruptcy Court judge at a Nov. 25 hearing in Los Angeles, providing there are no superior competing offers, which are not expected. Zuellig, based in Long Beach, is a business partner of Hauser and its primary shareholder, with 34 percent of the stock.
Hauser was once a promising company that pioneered the extraction of paclitaxel from tree bark the key ingredient in the blockbuster cancer drug Taxol but that business died out as other manufacturing methods were developed. It later entered the nutritional supplement business, but that market collapsed several years ago.
The sale of the extract business which had $27 million in annual sales, accounting for 70 percent of Hauser's annual revenue leaves the company with only a handful of other operations, including a contract research organization and a preservative business, both of which it expects to sell off.
That will leave the company with no operations, but it should still receive royalties from the sale of various intellectual property rights, potentially salvaging some value for the firms 700 shareholders, said Chief Executive Kenneth Cleveland, a turnaround specialist.
Turning a Switch
Edison International Chairman and Chief Executive John Bryson said in a conference call last week that the Rosemead-based energy company's board would likely recommend reinstatement of its common stock dividend next month.
The company, which suspended its dividend in January 2001 and nearly went bankrupt due to spiking wholesale energy prices, has recovered financially but kept the dividend on hold while awaiting the outcome of legal challenges to customer surcharges it was allowed to institute in the wake of the power crisis. Those issues were resolved in August in Edison's favor by the California Supreme Court.
On the call, Bryson didn't detail the size of the expected dividend. He said the first one would likely be paid in early 2004.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Former eUniverse CEO Wages Proxy Battle to Replace Board
- Officers of Ailing EUniverse Hand Back Some Cash
- EUniverse Model of Performance Pays Off
- Dot-Com Survivor eUniverse Facing Scrutiny From Regulators, Associates
- MySpace Guru Adds Asia To Friends List
- EUniverse Mulls New L90 Deal While SEC Probe Pushes Ahead
- Intermix Ex-CEO Battles News Corp. Sale to the Finish
- EUniverse Chief Holds Hope for L90 Deal