In a step toward selling some or all of the company, Organic filed an ownership statement with the Securities and Exchange Commission today about the formation of a new company, called Cinagro (Organic spelled backwards).
The new Delaware corporation, which absorbs the holdings of an investment entity called Organic Holdings, will own 59.5% of Organic and certain other unidentified assets. Organic Chairman Jonathan Nelson is the majority owner of Cinagro. Cinagro's purpose, according to the document, is "to enhance the value of Holdings' interest in the Common Stock by placing the stock in a corporation with no operating history. It is hoped that Cinagro might be a more attractive company for potential investors or potential purchasers."
The filing continues to state that the Cinagro board of directors, which includes Mr. Nelson, President Michael Hudes, Organic board member Gary Hromadko and Secretary-Treasurer Marita Scarfi, was "negotiating terms for the sale of the shares of Common Stock held by Cinagro to third parties, including other substantial shareholders of Common Stock."
That reference most likely refers to Seneca Investments LLC, the new e-holding company jointly managed by Omnicom Group and Pegasus Partners II. Seneca owns 17.3% of Organic, a stake formerly owned by Omnicom. Seneca said in a May 14 SEC filing that it was in discussions with Organic about increasing its beneficial ownership in the company, and Seneca has already made offers to purchase all of the outstanding shares of fellow Seneca-backed shop Agency.com.
Organic, like virtually all of its competitors, has been struggling amidst the Internet downturn. In early afternoon trading, however, Organic stock was up approximately 70%, trading at 58 cents. -- Catharine P. Taylor
Copyright June 2001, Crain Communications Inc.