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FortuneCity.com Inc.: FortuneCity Announces Strategic Investor Agreement
Ad hoc announcement transmitted by DGAP – a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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New York, USA, May 23, 2006: FortuneCity.com Inc. (“FortuneCity”)
announced today that it had entered into a strategic investment agreement
with a group of new investors raising $605,000 and adding strategic
management and transactional skills to the Company.
The new investors are lead by James Pearson, President and Chief Executive
Officer of US Cable Corporation, and Peter Hopper and Joseph Duggan,
Founders of DH Capital LLC, a New York based investment banking boutique.
As part of the agreement, Mr. Pearson and Mr. Hopper will become members of
the FortuneCity.com Inc. Board of Directors, replacing Dan Metcalfe and
Alex Mashinsky. Jay Metcalfe will remain as Chairman of the Board and
Peter Macnee will remain as President and Chief Executive Officer.
The Board of Directors of FortuneCity have for some time been reviewing the
Company’s strategic options and concluded that in order for the Company to
develop further it required both additional financial and managerial
resources, and if possible, new areas for business development. The Board
concluded that a number of businesses in which the Company was historically
involved did not have sufficient scale or fast enough organic growth to
build significant value for the Company. Consequently, during the past 12
months the Company elected to sell its paid web hosting business and its
German based online media sales business.
FortuneCity’s objective in entering this agreement is to provide the
Company with additional liquidity, but more importantly, to open the
possibility for the Company to acquire new businesses that will build value
for the Company’s shareholders. The transaction was structured to provide
a significant incentive for the investor group to work on the Company’s
behalf in identifying and acquiring new businesses.
As part of this agreement, the new investors have agreed to immediately
acquire 4,036,636 million shares in the Company at a price of US $0.15
cents for a total consideration of $605,495. As an incentive for the new
investors to develop the value of the Company further, FortuneCity has
granted the new investors warrants on 9,777,778 shares in FortuneCity at US
$0.15 cents exercisable within the next ten years, subject to the new
investors actively working, identifying and successfully negotiating an
acquisition acceptable to the Board of Directors. Should such activity
measurements not be met within the first 18 months following this agreement
then the Company and the new investors can both end the relationship by way
of a series of Put and Call Agreements. The Board of Directors has also
approved sale of 504,580 shares and 1,222,222 warrants on similar terms to
a company organized by Alex Mashinsky. It is expected The Company expects
that this transaction will close within 45 days.
Mr. Pearson joined US Cable in 1982 as Chief Financial Officer and became
President and Chief Executive Officer in 1986. US Cable, in partnership
with Comcast, ranks as the 22nd largest MSO in the United States. Mr.
Pearson is also Chairman of SmartCity Holdings, a leading provider of voice
and data services to Walt Disney World and to many of the largest US
convention centers. Previously, Mr. Pearson had an extensive banking
career as Second Vice President for the Continental Illinois Bank and Trust
Company as a lender to the media and communications industry.
Peter Hopper is a founding partner of DH Capital, LLC a New York investment
banking boutique that specializes in arranging financing, structuring
transactions and providing mergers and acquisition advice to small and
mid-market companies in the telecommunications, media and internet related
industries. Prior to founding DH Capital, Peter Hopper was CEO of DURO
Communications, one of the largest privately held ISP/CLECs in the US.
During his leadership at DURO, the company completed 50 acquisitions,
raised over $200 million in equity and debt financing and grew the company
to nearly $70 million in revenues. Previous to DURO, Peter managed New
Business Development for Helicon Cable Communications where he completed
multiple acquisitions of ISPs that were integrated into Helicon. Helicon
was sold to Charter Communications in 1999. Peter serves as a partner of a
BPI, LLC a $36 million private equity partnership.
Joseph Duggan is a founding partner of DH Capital, LLC. Prior to founding
DH Capital with Peter Hopper, Joe was a partner with Waller Capital
Corporation, where he completed several billion dollars of M&A and capital
placement work in the telecom sector. Previously, Joe was a senior banker
in the Media and Telecommunications groups of Credit Lyonnais, Toronto
Dominion and National Westminster Banks. He currently serves as a member
and General Partner in Waller-Sutton Media Partners, a $100 million private
venture fund.
The new investors, Jay Metcalfe, Peter Macnee and Dan Metcalfe have entered
into a stock lock up agreement, whereby they agree not to buy or sell any
FortuneCity shares for seven years. In addition, Jay Metcalfe has agreed
to not exercise the warrants issued in connection with the investment made
in 2003. Following the transaction the new investors own approximately 7%
of the current shares outstanding and will own on a fully diluted basis
approximately 20% of the Company if they exercise all their warrants.
Peter Macnee commented, ‘I believe that the new investors can add
significant value to FortuneCity and I’m confident that their participation
in the Company will allow it to capitalize on its current activities and to
develop new opportunities that have been unavailable due to our limited
resources. Jim, Peter and Joe are committed to enhancing the value of the
Company. I would like to thank, on behalf of the shareholders, Dan
Metcalfe and Alex Mashinsky for their service as Directors of the Company.
Particular thanks should be offered to Dan Metcalfe, who co-founded the
business in 1996, for his dedication and efforts over the years. We will
continue to draw on his vast expertise and knowledge of the Internet market
in the future.’
Contact:
Contact:
Peter Macnee
President & CEO
investor-relations@corp.fortunecity.com
+1-212-981-8624
(c)DGAP 23.05.2006
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Language: English
Issuer: FortuneCity.com Inc.
322 8th Avenue, 11th Floor
New York, NY 10001 Vereinigte Staaten von Amerika
Phone: +1 212 981-8600
Fax: +1 212 981-8125
email: investor-relations@corp.fortunecity.com
WWW: www.fortunecity.com
ISIN: US34969P1021
WKN: 919383
indices:
Listed: Geregelter Markt in Frankfurt (General Standard); Freiverkehr
in Hannover, Düsseldorf, Stuttgart
End of News DGAP News-Service
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