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(May 14, 2001) --, the New York-based i-shop that is partially owned by Omnicom Group, announced a major layoff today, while an offer was accepeted by the company's founders to sell their shares.

Chan Suh and Kyle Shannon said they had reached agreement with Seneca Investments LLC, the new holding company being formed by Omnicom and Pegasus Partners II LP, to sell their shares for cash to Seneca.

The company said that it would cut its staff by 25%, or about 350 people, in order to return to profitability. Its revenue for the quarter, which the company had released earlier this month, was $41 million, a figure that was in line with industry estimates, but substantially below its fourth quarter 2000 revenue of $56 million.

The company posted a cash net loss for the quarter before amortization of individuals and non-compensation of $4.7 million, as opposed to posted cash net income of $593,000 for the same period last year.

The sale offer calls for Seneca to pay an initial payment upon the deal's closing of 94 cents per share, and according to a company release, up to 47 cents per share in a second payment. The agreement, which is not yet finalized, would increase Seneca's stake in to 65.7% from 45.3%.

Omnicom transferred its stake in to Seneca earlier this month.

The company also said that it had received a non-binding offer from Seneca to acquire the remaining shares of the company for $3 a share. That offer is also not yet finalized, pending approval from's board of directors. -- Catharine P. Taylor

Copyright May 2001, Crain Communications Inc.

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