Major eCom (ECMV) Holders Nussdorfs Propose Acquisition of Model Reorg, A Company They Control
The transaction proposed by Model would have the following terms:
1. Model would be acquired by the Issuer and would become a wholly owned subsidiary of the Issuer.
2. The outstanding common stock of Model would be converted into 6,396,649 shares of common stock of the Issuer.
3. Following this conversion, Glenn and Stephen Nussdorf would own an aggregate of 80.90% of Issuer’s outstanding common stock (assuming the conversion of the Subordinated Note held by them, but not assuming the exercise of outstanding options). The projected percentage ownership set forth in the Proposal Letter assumes the exercise of the options, but not the conversion of the Subordinated Note.
4. Inter-company amounts due from Model to Quality King Distributors, Inc. (“Quality King”) will be paid in cash to Quality King, or converted into preferred stock or debt of Model prior to the transaction. Any such cash payment by Model may be financed by its issuance of additional debt. Glenn and Stephen Nussdorf own two thirds of Quality King’s equity and their sister, Arlene Nussdorf, owns the balance. If any preferred stock is issued in satisfaction of this inter-company amount, it will be converted into an equal number of shares of the Issuer’s preferred stock having identical terms.
5. The Issuer, or one of its subsidiaries, will issue indebtedness to unrelated third parties to provide working capital.
6. The transaction will be subject to the satisfaction of certain conditions, two of which will be that the transaction is approved and recommended to the stockholders of the Issuer by an independent committee of the board, and that the transaction is approved by a majority of disinterested stockholders of Issuer.According to a letter sent to eCom Ventures' Board of Directors, for the fiscal year ended October 31, 2006, the unaudited pro forma revenue of Model (giving effect to the acquisition of Jacavi) is expected to be $371 million.