Arena holds out for white knight to save the day

Internet portal is continuing to hold discussions with prospective investors
By : Roseanne Gerin

   Internet portal Arena (http://www.arena.pl) will hold out until the end of the month to try to find a white knight to rescue its financially drained operations, even though the company likely has more than zł. 1 million in debt, Rafał Plutecki, Arena’s cofounder and former president, said last week. If no investors are found by Sept. 30, the portal will be shut down.

   Arena officials, however, gave conflicting information last Friday about possible future funding. Plutecki said Arena’s investors had not yet decided if they would pony up additional capital. Arena is owned by CentralEuropa.com, in which Plutecki and a consortium of private investors control an 80% stake, while U.S. venture capital firm TDA Capital Partners (http://www.tdacapital.com) holds 20%.

   But Jan Steckiewicz, Arena’s acting president, said at a meeting of the board of directors last Thursday he received confirmation from some shareholders that they would continue to finance the operations of the company. He said he was “expecting a similar indication” from TDA.

   TDA, however, said early last week it would not invest any more capital in Arena. “Our funds are all committed,” said Joe Saldutti, a partner at TDA, adding that his firm had been a passive minority investor that had only committed 1% of its total capital to Arena. The portal was TDA’s only Internet-related investment in Central Europe, he said.

   Arena, which went bust in late August, two months after an unsuccessful attempt at an initial public offering (IPO) on the Warsaw Stock Exchange in June, is continuing to hold discussions with prospective investors, Plutecki said, but declined to name them.

   Meanwhile, Arena has adopted a restructuring plan to reduce costs, but neither Plutecki nor Steckiewicz would provide details. When asked how Arena would carry out the plan without funds, Plutecki, who is a member of the supervisory board of CentralEuropa.com, responded that it did not take “a huge amount to implement,” but declined to comment further. The operation of the Arena portal, which is still online, has been outsourced to a “group of individuals,” he said.

   Plutecki said he didn’t know exactly how much money the portal owed to its creditors and to former employees, but that the amount would probably be more than the roughly zł. 1 million owed to creditors in June when he stepped down as president after the failed IPO. Arena has sold its office and equipment to pay creditors, he added.

   Both Plutecki and Steckiewicz said that there are no indications that the portal will go bankrupt. Financial details about the portal’s current operations will be published in a report to be issued at end of September, Plutecki said.