Troubled Net firm looks for a white knight
Chip Schenck, Globopolis' vice president
By : Roseanne Gerin
Cash-strapped travel and entertainment Web site Globopolis is counting on a white knight investor to make a last-minute offer early this week. Without funds the company will be forced to shut down its remaining operations at the end of the month, a company official said last week.
Chip Schenck, Globopolis' vice president of marketing and sales, said the company is talking with four regional firms that are backed by Western multinational corporations. The firms, which include two telecom companies with Internet service provider and portal units, a mobile operator and an Internet/media company, are reviewing Globopolis' business documents. Schenck declined to name the companies, but said that none of the four has made an offer yet.
"We want to hold out as long as possible for a white knight, but if we have to close operations, then we have to," Schenck said. Globopolis has enough cash to sustain its remaining operations and pay its workers until the end of January, he added.
Globopolis started scaling down its operations and workforce two weeks ago after its original financial backers refused to provide a second round of funding. The company is now seeking an immediate $300,000-$350,000 cash injection to keep it afloat for the next two months, but wants its prospective investor to have at least $2 million on hand to run its operations, Schenck said. Globopolis burns an average of about $200,000 per month on operational expenses, he said.
The company's board plans to hold a conference call early this week to discuss possible investors, Schenck said. Globopolis is in the process of signing papers with its three original investors to terminate their involvement in the company, he added.
One local venture capital executive, however, said it would be unlikely that an investor would be willing to hand over cash to the troubled dotcom company.
"In the current market it seems to me it would be rather difficult to find an investor by the end of January because we are now seeing large portals having to go to the stock exchange to find investors," said Christopher Jasiak, vice president and partner of venture capital firm MCI Management and chief executive officer of the Poland.com portal. "No money just blindly flies at the Internet anymore."
Jasiak estimated that Globopolis would need three to six months to sell off its assets, while the Web site's domain name could command up to $200,000.
