| To: Glenn Petersen who wrote (224) | 2/18/2003 7:07:35 AM | | From: Glenn Petersen | | | | Divine wooing buyers for units
Sales would help in a bankruptcy
chicagotribune.com
By Barbara Rose
Tribune staff reporter
February 18, 2003
Divine Inc. is contacting potential buyers for its software and services businesses in an 11th-hour scramble to raise cash and also strengthen its position in a possible bankruptcy filing, according to sources familiar with the discussions.
A Divine spokeswoman said Monday that the company does not comment on speculation.
Divine's stock has plummeted on rumors that the company can't survive its latest cash crisis, including claims by a bankrupt subsidiary, RoweCom Inc., that Divine owes the business a total of $74 million.
Divine's stock fell by about 50 percent last week to close at 35 cents per share Friday. The market was closed Monday.
In recent days, Divine has contacted investors to invite them to do due diligence on various business units in advance of a bankruptcy filing, according to an investment banker and an unrelated potential buyer.
"They reached out to us in a very aggressive manner and gave a pretty strong indication they're going to file bankruptcy," said the potential buyer, who asked not to be identified.
The financial adviser said that by lining up buyers, Divine strengthens its prospects for an orderly wind-down. It's rare for software firms to emerge from bankruptcy.
Divine's management team "is trying to sell pieces," the adviser said. "Various advisers are selling pieces."
Negotiations, meanwhile, are continuing to sell RoweCom to a large, financially sound private company, EBSCO Industries Inc.
Divine has said the RoweCom sale would resolve Divine's problems and allow it to focus on its core business, which is selling software and services, including consulting and Web hosting.
Yet rumors persist that Divine is too troubled to survive the RoweCom crisis.
Ironically, Divine's biggest creditor--apart from RoweCom's disputed claim--is likely to be the bankruptcy trustee of another former Internet highflier that once turned to Divine for help.
MarchFirst Inc. was facing a cash crisis in spring 2001 when Divine's founder and chief executive, Andrew "Flip" Filipowski, bought the company's Midwest operations for $12.5 million cash and a balloon payment due in five years.
That $57.5 million payment is due in April 2006.
Meanwhile, Divine has more pressing problems.
Divine burned through $27 million in the third quarter, leaving $63 million in unencumbered cash as of Sept. 30, according to its most recent quarterly report filed with the Securities and Exchange Commission.
At the time, Divine had drawn about $10 million on a $40 million line of credit from LaSalle National Bank, according to the filing.
Divine's fourth-quarter report is scheduled for release on Feb. 25, when it is expected to take a $300 million writedown of goodwill--a non-cash charge.
Observers had speculated Divine's most likely savior would be Oak Investment Partners, which last year effectively bought control of the company with its investment of $61 million.
Oak Investment Partners's managing partner Fred Harman did not return telephone calls Monday.
Copyright © 2003, Chicago Tribune |
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| To: Glenn Petersen who wrote (225) | 2/18/2003 10:37:45 AM | | From: Glenn Petersen | | | | Divine May File for Bankruptcy
Tuesday February 18, 8:55 am ET
biz.yahoo.com
CHICAGO (Reuters) - Software services firm Divine Inc. (NasdaqNM:DVIN - News), which has struggled amid a prolonged slump in technology spending, on Tuesday said it would explore strategic alternatives, including filing for bankruptcy protection.
Divine, an Internet incubator turned business software developer, said it had hired Broadview International LLC to advise it on its options, which could also include divesting assets or similar deals.
Divine said it is in active discussions to sell several businesses or assets. |
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| To: dave rose who wrote (227) | 2/18/2003 12:21:47 PM | | From: Glenn Petersen | | | | Flip won't go to jail, but he will be a pariah in the Chicago business community. Come to think of it, he was a pariah before he took DVIN public. <gg>
This was an IPO that never should have happened. It was forced out in July 2000, long after the peak of the bubble. I have a friend who participated in a 1999 private placement, picking up 60,000 shares at $1. He put them into the accounts for his two young children He was thinking $1 million plus. The kids were going to be on easy street. That was before the pre-offering one for six reverse split and the recent one for twenty-five. The kids now have 400 shares at $.35. Welcome to the work force. |
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| To: StormRider who wrote (230) | 2/25/2003 11:42:17 PM | | From: Glenn Petersen | | | | divine, inc. to File Voluntary Petition to Reorganize Under Chapter 11 Today
Operations Expected to Continue Without Interruption;
Company has Received Letter of Intent to Acquire All Assets of the
Business and Continues to Seek Potential Buyers
CHICAGO, Feb. 25 /PRNewswire-FirstCall/ -- divine, inc. (Nasdaq:DVIN) announced today that its board of directors has authorized divine and several of its subsidiaries to file a voluntary petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code later today. Today's action will be taken to protect the value and viability of divine's operations while it works to restructure its liabilities and achieve a timely and favorable resolution to the remaining economic issues facing the RoweCom, inc. subsidiary. In part to increase the efficiency of the reorganization process, divine will file the petition in the United States Bankruptcy Court in Boston Massachusetts, the same venue where RoweCom's Chapter 11 case is proceeding. divine's subsidiary divine/Whitman-Hart, formed with the acquisition of certain assets of marchFIRST, is not included in this filing.
The firm of Casas, Benjamin & White LLC (CBW), a financial advisory firm that specializes in corporate restructurings, will assist divine's current management team in handling day-to-day operations. divine and CBW intend to continue to explore strategic options with Broadview International LLC including the possible sale of its assets to a well-capitalized buyer or buyers, in order to maximize return to creditors. divine is reporting approximately $25 million in unrestricted cash on hand, which will provide sufficient capital to operate the business as various options are considered to maximize value to the creditors.
Since engaging Broadview to explore strategic options, divine has received substantial interest in each of its operating units, with several organizations expressing interest in purchasing some or all of divine's assets and operations. divine has received a letter of intent from financial investment firm GTCR Golder Rauner LLC to acquire divine's business in its entirety. Any sale of divine's assets would be accomplished pursuant to section 363 of the Bankruptcy Code and would be subject to final approval of the Bankruptcy Court. Any sale would also be subject to an auction process to yield the highest and best offer.
One of divine's top priorities is ensuring that customers are protected and that they continue to receive products, services and support. divine has retained the critical staff to ensure that its operations will continue without interruption during the Chapter 11 reorganization and sale process. divine expects that the protections of the Chapter 11 process will allow the company to undertake these efforts, as well as seek potential buyers of its assets, in an organized, Court-supervised setting and with minimal disruption to its businesses.
As a result of this filing, divine's fourth-quarter and end-of-year 2002 financial results release and conference call, previously scheduled for this afternoon, have been cancelled.
About divine, inc.
divine, inc., (Nasdaq:DVIN) is focused on extended enterprise solutions. Through professional services, software services and managed services, divine extends business systems beyond the edge of the enterprise throughout the entire value chain, including suppliers, partners and customers. divine offers single-point accountability for end-to-end solutions that enhance profitability through increased revenue, productivity and customer loyalty. The company provides expertise in collaboration, interaction and knowledge solutions that enlighten, empower and extend enterprise systems.
Founded in 1999, divine focuses on Global 5000 and high-growth middle market firms, government agencies and educational institutions and currently serves over 20,000 customers. For more information, visit the company's Web site at divine.com .
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995
The statements contained in this news release that are forward-looking are based on current expectations that are subject to a number of uncertainties and risks, and actual results may differ materially. The uncertainties and risks include, but are not limited to: divine's ability to successfully sell assets or businesses; divine's ability to generate sufficient cash from these sales; divine's ability to develop new customers and retain existing customers while in a distressed condition; divine's ability to become cash flow positive before it depletes its cash reserves or becomes insolvent; divine's ability to retain key personnel; divine's ability to maintain its Nasdaq listing; divine's ability to develop enterprise Web software and services; the uncertainty of customer demand for enterprise Web software and services; divine's ability to predict revenues from project-based engagements; divine's ability to reduce expenses to levels consistent with its revenues; divine's ability to keep pace with technological developments and industry requirements; divine's ability to effectively manage its operations; changes in the market for Internet services and the economy in general, including as a result of any additional terrorist attacks or responses to terrorist attacks; increasing competition from other providers of software solutions and professional services; the extent to which customers want to purchase software applications under hosted subscription based models; divine's ability to address the risks associated with international operations; and other unanticipated events and conditions. For further information about these and other risks, uncertainties, and contingencies, please review the disclosure under the caption "Risk Factors" in divine's most recently filed Form 10-K, and under the caption "Special Note on Forward-Looking Statements" in divine's most recent Forms 10-K and 10-Q filed with the SEC. When used in this release and documents referenced, the words "anticipate," "believe," "estimate," "will," and "expect" and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements. You should not place undue reliance on these forward-looking statements, which reflect management's analysis, judgment, belief, or expectation only as of the date hereof. divine undertakes no obligation to publicly revise these forward-looking statements or risks, uncertainties, or contingencies to reflect events or circumstances that arise after the date hereof.
divine is a trademark of divine, inc. All other trademarks, trade names and service marks referenced herein are the properties of their respective companies.
SOURCE divine, inc.
CO: divine, inc.
ST: Illinois
SU: BCY RCN
prnewswire.com
02/25/2003 09:02 EST |
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| To: Glenn Petersen who wrote (231) | 3/2/2003 2:30:08 PM | | From: Glenn Petersen | | | | Divine saga leaves some richer--in experience
By Barbara Rose
Tribune staff reporter
siliconinvestor.com
March 2, 2003
In the summer of 1999, while the U.S. stock market defied gravity, the Internet's true believers were convinced technology had ushered in an age of unparalleled opportunity.
No local figure represented this new religion more conspicuously than Andrew "Flip" Filipowski, whose gift for salesmanship and network of well-placed friends--including Mayor Richard Daley--gave him a platform to promote a company that promised to make Chicago a high-tech capital.
"We want to make Silicon Valley a real bad choice" for starting a business, he told a standing-room-only crowd of professionals and CEOs at a meeting for prospective investors in Lisle in 1999.
How his plan played out over the next 3 1/2 years at Divine Inc., which filed for Chapter 11 bankruptcy Tuesday after losing nearly $1 billion, reveals as much about Chicago's aspirations and the national fallout from an investing bubble as it does about Divine's 52-year-old founder.
Filipowski filled a void in a region that feared getting left behind. He seeded scores of ventures that failed, leaving Chicago to shrug off Divine's legacy of losses.
But some of the entrepreneurs he backed persevered, personally richer from their experience.
"I didn't benefit financially, but I saw the company I founded grow and prosper," said Nate Weersing, who quit Divine two years ago to join Chicago's SEI Information Technology Inc. "That's the positive legacy."
It took a larger-than-life persona to mobilize Chicago's eager strivers. And Filipowski, a rebellious son of Polish immigrants and a workaholic with a flair for the dramatic, filled the bill.
Fresh from having sold his public software firm, Platinum Technology International, for $3.5 billion in what was then the industry's biggest merger, he had both cash and credibility.
While scores of entrepreneurs came to him in 1999 for financing, the corporate elite, from William Wrigley Jr. to Tellabs CEO Michael Birck, put millions of their personal wealth on the line.
Major corporations like Microsoft Corp.--now one of Divine's biggest unsecured creditors, owed $1.9 million--invested hundreds of millions in Divine's initial public offering on the gamble that they would recoup their equity in future sales to the start-up.
For his part, Filipowski invested about $30 million of his $290 million from Platinum's sale.
"It wasn't just Flip making a promise" to boost Chicago's fortunes, said Karen Andre, Filipowski's former marketing director. "It was the market being receptive to a leader who would go out there and pave the way."
Results off target
By the time Divine ran through most of its cash late last year, the company little resembled Filipowski's vision.
Most of its start-ups had failed, and the larger companies acquired during Filipowski's bottom-fishing binge all were located outside Chicago: a Web hosting company in Texas, a telemarketing software firm in Georgia, a now-bankrupt library subscription management service in Massachusetts.
Despite buying some well-regarded products and services and a workforce of more than 3,000 at peak, Divine made little impact on the fragmented market niche on which Filipowski focused: helping corporations manage information and customer relationships.
The leading candidate to buy its assets, private equity firm GTCR Golder Rauner LLC, is likely to break Divine into two or three of the companies Divine bought, then sell or close the others.
"No one took on anything as massive as Divine tried," said Andrew Schroepfer, president of Tier 1 Research in Plymouth, Minn. "[But] they acquired too many weaker companies in too many different industries."
At Filipowski's 1999 meeting in Lisle, he held his audience for more than one hour, describing his plans while standing next to a rendering of Divine's original logo, a Japanese fish called a koi.
"When we go through life we want to leave a trace, a sort of legacy," he said, "like the trace a koi leaves in a pond."
Divine's most immediate legacy is shareholder losses and layoffs--an estimated 500 employees in February alone, leaving 1,748 worldwide.
Its stock, which likely will be worthless when Divine's bankruptcy reorganization is complete, remained at 7 cents Friday.
Upside remembered
But for some entrepreneurs, the legacy is positive.
Weersing, the SEI executive, was 27 in 2000 when the company he cofounded in 1997, Westbound Consulting LLC, was running short of money.
The firm offered lower-cost services using programmers in India, but despite the booming market for information technology consulting, it was too small to compete for corporate contracts.
Divine came along, offering Weersing and his partner $1 million to expand.
"There aren't a lot of places to learn how to deploy $1 million when you're 27 years old," Weersing said. "Divine helped entrepreneurs make real decisions with real money behind those decisions."
Weersing, now based in London, is drawing on his Westbound experience while opening a European operation for SEI.
Westbound, meanwhile, survives as part of Divine, which operates a sizeable programming center in India.
Other entrepreneurs are among Divine's biggest unsecured creditors. Several around the country are owed six-figure severance payments, representing Divine's buyouts of employment contracts that they negotiated when selling their companies to Divine for stock during its merger binge.
Chicago's Paul Cooper and Peter Prokopowitz left Divine in December, leaving behind the technology and customers they developed since 1996 at software firm Perceptual Robotics Inc., which operates Web cameras for corporate customers.
Filipowski was an early investor in PRI. Divine bought a stake in 1999 and acquired the remainder in 2001.
"I think of Divine as a caricature of the whole Internet bubble," Prokopowitz said. "It's not what will take Chicago to the forefront of the high-tech world.
"[What will] is the collection of entrepreneurs. You can't look to somebody like Flip to make it happen for us."
Filipowski and his longtime chief financial officer, Michael Cullinane, have been unavailable for interviews in recent weeks.
Divine is facing big legal problems, including a suit claiming the company illegally diverted $74 million from its now-bankrupt library subscription subsidiary, RoweCom Inc.
A settlement is considered likely, but the RoweCom claim complicates Divine's reorganization and sale.
Meanwhile, it's never wise to count Filipowski out.
An inveterate entrepreneur, his business ventures include Blue Rhino Corp., a hot Nasdaq company that lets customers exchange their propane grill cylinders at convenience stores and other outlets.
Blue Rhino is set to soon launch a new product, SkeeterVac, which uses propane to attract and kill mosquitoes.
On the day Divine filed bankruptcy, Blue Rhino was anything but blue. It reported a net profit for the quarter ended Jan. 31, and sales were up 50 percent.
Copyright © 2003, Chicago Tribune |
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| To: Glenn Petersen who wrote (232) | 3/2/2003 7:20:52 PM | | From: Sr K | | | | ?? Its stock, which likely will be worthless when Divine's bankruptcy reorganization is complete, remained at 7 cents Friday.
DVINQ closed down 28% at 5 cents. DVIN had last traded at 7 cents. |
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| To: Sr K who wrote (233) | 3/2/2003 10:05:40 PM | | From: Glenn Petersen | | | | | I have met Barbara Rose and details are not her strong point. I am surprised that her editor did not catch the error. Interesting that Filipowski only put in 10% of his net worth. No tag day for Flip. |
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