|
 Some unnamed investors wanted out, multiple attempts to close a deal
or raise funds failed, and a public market debut looked increasingly
unlikely, the documents show.
Avid Life Media announced on Friday that CEO Noel Biderman, who
founded the website in 2001, had left the company with immediate
effect, the latest sign of the wrenching impact on the company of
the attack that led to the disclosure of sensitive data about
millions of clients.
In an April 2015 letter addressed to all its investors, closely-held
Avid Life acknowledged that some investors had pressed it to improve
liquidity so they could sell shares. The company said it would buy
back up to $10 million worth of shares.
"Over the last couple of years, we have not been successful in
exploring various alternatives including a sale of the business and
seeking debt from third parties," said the letter signed by the
board of directors.
Reuters could not independently verify the authenticity of the email
messages and internal documents.
Avid Life did not respond to repeated requests for comment. Members
of the company's board also could not be reached for comment.
Biderman was not reachable by phone.
DILLER HOPES DASHED
The attack has likely sharply lowered the price Avid Life could
muster in any sale of assets, assuming it could find a buyer willing
to take on a company facing several multi-million dollars lawsuits
and the challenge of rebuilding a computer network that has been so
badly infiltrated.
Bankers told Reuters last month - before the massive disclosure of
its customers' information - that a full data dump would create a
'doomsday scenario' for the company, and kill any IPO plan.
Several messages show that Biderman was trying to secure a meeting
with executives at media mogul Barry Diller's IAC/InterActive Corp,
whose biggest online dating assets, including Match.com and Tinder,
are being prepared for a public market spinoff. Biderman's goal was
to start acquisition talks with the much larger rival.
"They would be CRAZY not to speak with us," wrote Biderman in
February this year. And in May: "If there was ever a moment to have
a 'private' meeting with Diller, it is now."
But in an email message later forwarded to Biderman by an
intermediary, one IAC director, Bryan Lourd, was blunt about the
chances IAC might buy Ashley Madison: "They don't want it."
IAC declined to comment "on rumors and speculation about
transactions."
Avid Life in April said it was considering an initial public
offering in London, at a $1 billion valuation, with company
executives expressing hope in media interviews that European
investors would prove more understanding of the controversial
business than those in North America.
The emails show that Biderman received an informal approach in May
from Cliff Lerner, the CEO of Snap Interactive Inc <STVI.PK>, which
owns the online dating site AYI.com. Lerner suggested a reverse
takeover and a Nasdaq listing.
[to top of second column] |
A spokesman for Snap said Lerner had a short back and forth email
conversation with Avid Life representatives, but ultimately decided
a deal wouldn't work.
By June, Biderman called the IPO a "long shot" in one email. He told
an acquaintance, who helped put other companies’ financing deals
together, that he was looking to raise between $50 million and $75
million in debt.
Similar efforts had fallen through before. Avid Life had a letter of
intent from Fortress Credit Corp, part of Fortress Investment Group
LLC <FIG.N>, to borrow $43 million in September 2013, the documents
the hackers released show, but the deal never went through.
"I can confirm that the proposed loan you referenced did not close,"
Gordon Runté, head of investor and media relations at Fortress, said
in response to queries, declining to comment further on the reasons.
Avid Life had intended to use some of that cash to pay a dividend to
its shareholders, the proposal, dated September 6, 2013, showed.
It also received a term sheet for a $40 million three-year loan from
GMP Securities, a Canadian investment bank, in 2012.
GMP said the deal was not completed and it has never loaned Avid
Life any money. It declined to specify why.
The emails also show that Avid Life came close to selling itself at
least three times in 2012.
In one instance, a deal with Canadian billionaire Alex Shnaider and
frozen yogurt mogul Michael Serruya fell apart because of CEO
Biderman's "difficult and very demanding" personality, according to
an email from the potential buyers. Two other attempted deals, with
a boutique investment bank and a private equity firm, also fell
apart.
Shnaider confirmed that he and Serruya wanted to strike a deal to
acquire Avid Life and had agreement in principle to buy it. “We
didn’t feel comfortable, at the end of the day, going through with
the deal,” he said.
A spokesperson for Serruya did not immediately return calls.
(Editing by Amran Abocar and Martin Howell)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
