98% Of Alloy Debenture Holders Effect Conversion
12 Dicembre 2006 - 10:30PM
Business Wire
Alloy, Inc. (Nasdaq: ALOY), a nontraditional media and marketing
services company primarily targeting the 10 to 24 year old
demographic group, announced today that since August 30, 2006,
holders of approximately 98%, or $67.9 million principal amount, of
its 5.375% Senior Convertible Debentures (the �Debentures�) have
converted their holdings into Alloy and dELiA*s, Inc. (�dELiA*s�)
common stock. As a result of the conversions, approximately $1.4
million principal amount of the Debentures remains outstanding and
Alloy has issued approximately 2 million shares of its common
stock. Matt Diamond, Chairman and Chief Executive Officer stated,
�We are very pleased with the effect these conversions have had and
will continue to have in our financial statements. These
conversions have created approximately $27 million in value for our
shareholders, based on the debt retired less the value of the Alloy
stock issued and cash premiums paid. Our free cash flow has also
improved as a result of our future cash interest expense being
reduced to only $75,000 on an annual basis from $3.7 million at the
beginning of our last fiscal year.� Mr. Diamond added, �We continue
to believe that the Company, with its projected improvement in
EBITDA and free cash flow, its strong cash balance and its low
debt, is strategically well positioned to create additional value
for our shareholders.� In addition to Alloy and dELiA*s issuing the
requisite number of shares required pursuant to the Indenture under
which the Debentures were issued, Alloy also paid each of those
holders varying cash premiums for agreeing to convert their
Debentures. Accordingly, related to these conversions, Alloy has
recorded an expense in its third quarter financial statements of
$15.8 million and will be recording an expense in its fourth
quarter financial statements of approximately $1.9 million. These
charges are comprised of the cash premiums paid to holders, the
write-off of the unamortized balance of deferred debt issuance
costs attributable to the Debentures and other costs of the
transactions. For the third fiscal quarter, Alloy�s additional
paid-in capital on its balance sheet increased by approximately $57
million and, assuming no future conversions, will increase by
approximately $11 million in its fourth fiscal quarter. About Alloy
Alloy, Inc., under the banner of Alloy Media + Marketing (AM+M), is
a widely recognized pioneer in nontraditional marketing. Working
with AM+M, marketers reach consumers through a host of programs
incorporating Alloy�s diverse array of media and marketing assets
and expertise in direct mail, college and high school media,
interactive, display media, college guides, promotional and social
network marketing. For further information regarding Alloy, please
visit our corporate website at (www.alloymarketing.com).
Forward-Looking Statements This announcement may contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, including statements regarding our expectations and
beliefs regarding our future results and performance, including the
anticipated effects of the Debenture conversions on the Company�s
financial results. Because these statements apply to future events,
they are subject to risks and uncertainties. When used in this
announcement, the words �anticipate�, �believe�, �estimate�,
�expect�, �expectation�, �project� and �intend� and similar
expressions are intended to identify such forward-looking
statements. Our actual results could differ materially from those
projected in the forward-looking statements. Additionally, you
should not consider past results to be an indication of our future
performance. Factors that might cause or contribute to such
differences include, among others, our ability to: increase
revenues; generate high margin sponsorship and multiple revenue
streams; increase visitors to our Web sites (www.alloy.com,
www.delias.com, and www.ccs.com) and build customer loyalty;
develop our sales and marketing teams and capitalize on these
efforts; develop commercial relationships with advertisers and the
continued resilience in advertising spending to reach the teen
market; manage the risks and challenges associated with integrating
newly acquired businesses; and identify and take advantage of
strategic, synergistic acquisitions and other revenue
opportunities. Other relevant factors include, without limitation:
our competition; seasonal sales fluctuations; the uncertain
economic and political climate in the United States and throughout
the rest of the world, and the potential that such climate may
deteriorate further; and general economic conditions. For a
discussion of certain of the foregoing factors and other risk
factors see the �Risk Factors That May Affect Future Results�
section included in our annual report on Form 10-K for the year
ended January 31, 2006, and in subsequent filings that we make with
the Securities and Exchange Commission. We do not intend to update
any of the forward-looking statements after the date of this
announcement to conform these statements to actual results, to
changes in management�s expectations or otherwise, except as may be
required by law.
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