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Mail.com Looks to Reduce Debt

Messaging services provider Mail.com, Inc. , is swapping out some debt service as it works to achieve profitability.

In a note exchange agreement, the company said it would issue $11.7 million of 10 percent senior convertible notes due in five years. The notes, non-callable for three years, are in exchange for the cancellation of $38.98 million in principal of its 7 percent convertible subordinated notes due Feb. 1, 2005.

The exchange is to help it cut long-term debt to $28.2 million and save on interest payments of up to $2.1 million annually.

The notes are convertible to Class A common stock at $1.30 per share, barring any anti-dilution adjustments, the company said. Half of the interest payments on the loans would be payable in Class A common stock valued at the then applicable conversion price until 18 months after the date of issuance.

The arrangement follows a $10 million financing the company arranged late last year, in which it issued notes with a 10 percent coupon due Jan. 8, 2006, non-callable for three years. Those would convert to class A common stock at $1.00 per share. As part of that deal, Stephen Duff of Federal Partners also joined the company's board of directors.

Mail.com, which provides application service provider messaging services, has been shedding some non-core assets in order to stay focused on its core ASP business. In October, the company said it would get out of the online advertising business to focus on messaging. The company also said it would sell its advertising network business, which provided email-based advertising and permission marketing services.

In its most recent SEC filing for the quarter ending Sept. 30, 2000, Mail.com announced a net loss of $53 million, or 88 cents per diluted share, on revenues of $18.5 million. Shares of the company were unchanged in Monday's early session at $1.25.