IDG News Service - A Web site with almost 3 million registered users and millions of dollars in financial backing yesterday released details of its fall into bankruptcy and the planned acquisitions of most of the site's assets.
CollegeClub.com Inc. said it will be acquired by Student Advantage Inc., an Internet educational content and commerce specialist. Initial figures call for Boston-based Student Advantage to pay about $7 million in cash and 1.5 million shares of its stock. Another $5 million may also come CollegeClub's way from Student Advantage if the vendor meets specific Web site revenue goals next year.
The completion of the deal hinges on several factors, however, including approval by the U.S. Bankruptcy Court in San Diego. That's where CollegeClub, its owner and various subsidiaries filed Monday for a voluntary petition for reorganization under Chapter 11 of the U.S. Federal Bankruptcy Code.
Almost five years ago, CollegeClub.com began operations and looked to the Internet as a way to attract both students and educators to an online locale with roommate finders, credit-card applications, loan services and textbook stores -- basically, anything a Digital Age collegian might need.
Due in part to an aggressive marketing campaign and user satisfaction, the site began attracting customers at a swift clip. At last count, College Club boasted 2.9 million registered online members, according to the company's numbers.
Investments flowed in from venture capitalists, car manufacturers and media giants alike. By the first quarter of last year, CollegeClub had secured a partnership with WorldCom Inc. that provided users with free access to e-mail via the phone and free voice mail, in addition to the e-mail and paging services the site already provided. Shortly thereafter, CC -- as it's known to users -- raised around $15 million in financing from a group of investors that included Convergence Partners and France-based Viventures.
In early January this year, the company continued to receive attention from both existing and new investors. It secured $40 million from Seligman Technology Group via the group's investment fund and additional money from previous investors Convergence and Sony Corp. Later deals included partnerships with Ericsson Inc. and General Motors Corp., along with a planned initial public offering (IPO).
Then, CollegeClub hit the organizational and financial difficulties that have apparently made it ripe for takeover. In June, CEO Michael Pousti and chief operating officer James DeBello resigned. In the wake of these announcements, the company withdrew its IPO.
While one source close to the company traces the financial difficulties to some unorthodox spending practices by the management, the planned owner of CollegeClub said it believes that
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