BIRMINGHAM, Ala., Jan. 25 -- RoweCom, Inc., doing business as RoweCom, Faxon or divine Information Services, announced today the signing of a non-binding letter of intent with EBSCO Industries, Inc., the global leader for the delivery of integrated information systems and services, for the proposed purchase of the RoweCom worldwide subscription agent business (the "Business"). The proposed transaction was also endorsed by the steering committee of the ad-hoc group of publishers and library customers of RoweCom. The committee, including the publisher members the American Institute of Physics, the Association of Learned & Professional Society Publishers, Elsevier, Oxford University Press and Wiley, will endeavor to expand the group of publishers supporting this transaction as they believe the contemplated agreement is a significant step forward for customers and publishers.
The proposed transaction is subject to due diligence and definitive documentation, among other customary conditions to be satisfied prior to completing the transaction, including regulatory approval and the like. Additionally, the proposal will require publishers and libraries to work with EBSCO regarding the fulfillment of prepaid RoweCom orders. The U.S. transaction will be implemented through a chapter 11 bankruptcy filing of RoweCom.
This announcement follows the December 20, 2002 press release by RoweCom's parent company, divine inc. ("divine"), which indicated that divine had decided to no longer support the Business. Since late December there has been considerable concern and uncertainty among RoweCom's customers and publishers with respect to orders placed with RoweCom, most of which have not been placed with publishers. However, a number of publishers had agreed to grace RoweCom customers while investigations and negotiations ensued over a possible restructuring of the RoweCom business.
What does this mean for RoweCom customers and publishers if the transaction is completed?
For customers of RoweCom's European operations, all orders placed with RoweCom will be fulfilled. The parties intend to execute definitive purchase documents within 10 days subject to French regulatory filings as required by French law. divine has agreed to provide working capital funding for RoweCom's European operations in the interim. Once the transaction receives French regulatory approval and the transaction closes, EBSCO will remit payment to publishers in full. Until that time, EBSCO is asking publishers to continue to fulfill subscriptions. EBSCO has already secured participation from the majority of the publishers and is optimistic the remaining publishers will agree, now that the situation appears to be clarified.
For customers of RoweCom operations outside Europe (i.e., U.S., Canada, Australia, etc.), there are basically three situations:
For a customer who has paid RoweCom and RoweCom has forwarded this payment on to the publishers, the customer will receive journals from the publishers. For a customer who has not paid RoweCom, the customer will receive their journals once orders are confirmed to EBSCO. Upon confirmation, EBSCO will make the appropriate payment to publishers.
For a customer who has paid RoweCom and RoweCom has not forwarded this payment to the publishers, the customer will receive journals from publishers who participate in this transaction.
RoweCom, EBSCO and the ad-hoc committee appreciate the continued consideration and understanding of RoweCom's library customers during this most difficult period.
RoweCom is a subsidiary of divine, inc. This press release contains certain forward-looking statements with respect to RoweCom that are subject to risks and uncertainties. For example, such risks and uncertainties include the closing of the transactions summarized herein; the ability of RoweCom to implement a restructuring plan to maximize the amount realized for stakeholders; continued cooperation of RoweCom's publishers; the availability of strategic alternatives for RoweCom; the adequacy and availability of cash to operate its business; RoweCom's ability to maintain sufficient cash flow and liquidity; the availability and accessibility of financing at affordable levels for RoweCom and the ability of RoweCom to tightly control expenditures.
About EBSCO Industries, Inc.
EBSCO Industries, Inc. is a global corporation with sales, service and manufacturing subsidiaries at work in 19 countries around the world. EBSCO's business interests include information management services, journal and periodical subscription services, real estate development, commercial printing and more. EBSCO, an acronym for Elton B. Stephens Company, is based in Birmingham, Alabama and employs 4,000 people around the world. Additional information on EBSCO Industries is available from http://www.ebscoind.com
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