Student Advantage Inc. (STAD)
has agreed to purchase the assets of troubled community website
CollegeClub.com for about $18.25 million in cash and stock.
On Monday, CollegeClub, beset by financial shortfalls and
employee layoffs, filed for Chapter 11 bankruptcy protection.
Student Advantage, a collection of offline and online media
properties, marketing and e-commerce services aimed at college
students, says it will incorporate CollegeClub's 2.9 million
registered members into its network.
The purchase price consists of $7 million in cash and 1.5 million
shares, or 4.5 percent, of Student Advantage stock, trading at $7.50
per share this morning. The agreement also calls for an additional
cash payment of up to $5 million to CollegeClub if certain revenue
targets are met during 2001, the companies said.
The deal is subject to approval by the U.S. Bankruptcy Court in
San Diego, where CollegeClub is headquartered.
In June, CollegeClub withdrew an $85 million initial public
offering and put itself up for sale. At the same time, the company’s
founder and CEO resigned, and an undisclosed number of employees
were fired to cut costs.
Since then, additional management executives and employees have
either departed or been laid off, leaving the company with a
skeleton crew of survivors.
The problem, of course, was that CollegeClub could not generate
enough revenue from its relatively large member base. The company
lost $25.8 million on $2.9 million in revenue during 1999, all the
while rapidly burning through its remaining operating
cash.
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