Intermix Media Inc. last week landed a $4 million equity investment from venture capital firm Redpoint Ventures, which will also invest $11 million in one of Intermix's subsidiaries.
The deal comes on the heels of a broad restructuring that has restored the Los Angles-based company's health after a period of problems that started with a restatement in 2003.
"The majority of people had written off the company as dead," said Richard Rosenblatt, who was brought in to replace former chief executive Brad Greenspan after he was ousted in a proxy fight last spring. At the time, the company was called eUniverse Inc. "We had restated, the whole business was losing money, it was all a mess."
Redpoint will receive a million shares of Intermix stock and a warrant to purchase another 150,000 shares at $4 a share. Silicon Valley-based Redpoint also invested $11 million to establish a partnership in My Space Inc., a semi-autonomous subsidiary of Intermix that hosts subscription-based Web sites for social networking, including space for blogs and photos.
EUniverse's problems started when the company, founded in 1999 as a network of Web sites with games, quizzes and cartoons, grew too fast to keep up with its own accounting, Rosenblatt said. This led to a restatement for the nine months ended Jan. 31, 2003.
With a Securities and Exchange Commission investigation under way, Nasdaq delisted the company in September of that year. Within months, Greenspan filed a complaint against the directors and shareholders, challenging their move to fire him.
Since July, Intermix has undergone broad restructuring, including the name change, replacement of a number of board members and key executives, and the closing down, sale or consolidation of business units. Intermix was re-listed on the American Stock exchange trading under the symbol MIX in October; in November, the SEC dropped its investigation and Intermix settled a shareholders lawsuit, with its insurers funding the $5.5 million settlement.
As of Dec. 8, Intermix shares were trading at $5.78 each, up 261 percent since the beginning of the year.
Intermix reported net income of $3.6 million for the second quarter ended Sept. 30, compared with a loss of $3.6 million for the like period a year earlier. The most recent period included a gain of $4.6 million from the disposal of assets.
Revenues rose to $17.8 million from $11.3 million a year earlier. Results from the year-ago period were restated.
Through its Web sites, Intermix acts as an online retailer and marketer through revenue-sharing deals with product inventors and manufacturers. Its networks consist of hundreds of Web sites with quizzes, games and downloads. MySpace requires a user subscription.
Sale of the Century
Sports Club Co., the Los Angeles owner of the trendy Sports Club/LA fitness clubs, is in advanced talks to be sold to real estate developer Millennium Partners for about $200 million, the New York Post reported last week.
A deal was not certain, the newspaper reported. Rival suitors, including competitor Equinox Fitness, could still step in with higher offers.
Sports Club operates 10 clubs under the Sports Club/LA name in Manhattan, Southern California, Boston, Miami and Washington, D.C.
Under the plan being discussed, Millennium, which already owns 42 percent of Sports Club and is its landlord in a number of locations, would assume $120 million in debt and close the 100,000-square foot Sports Club in Rockefeller Center in New York, the Post said.
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