RealTime IT News

HomeSeekers Gets Cash Infusion

Ailing online real estate technology and services provider HomeSeekers.com effectively gave control of the company to privately held E-Home.com Inc. (also known as HomeMark) in exchange for a $20 million equity investment.

HomeSeekers, its stock price trading at 65 cents a share at mid-morning, had reported a loss of $14.7 million or 45 cents per share for its third quarter ending March 31. The company had lost $15.6 million in its first two fiscal quarters, and has never posted a profitable quarter.

The company had said in its 10Q filing on May 15 that it would not be able to continue to operate unless financing was obtained.

HomeMark agreed to buy, in a series of transactions scheduled from July 2001 through March 2002, five million shares of preferred stock at $4 per share.

Concurrent with the stock deal, HomeMark entered into short-term loan agreements and will advance Reno, Nev.-based HomeSeekers up to $2 million.

As part of the deal, four new members will join the HomeSeekers board, all recommended by HomeMark, including Joseph Harker, chief executive officer of HomeMark.

The preferred stock shares are each convertible into 20 shares of unregistered common stock after a period of 24 months, for a total of 100 million shares of common stock and at that time would represent an ownership stake in the company of about 61 percent. However, HomeSeekers may redeem the preferred stock at any time prior to conversion at a cash price of $4 per share.

Each share of preferred stock will be entitled to immediate voting rights of 20 shares of common stock, representing a current voting interest of approximately 68 percent or, in effect, control of the company.

In addition to the cash purchase price, HomeMark will assign and contribute to capital $80 million of prepaid advertising owned by HomeMark in a national print publication, or an additional $16 per share for the preferred stock.

HomeSeekers provides technology solutions and services targeted to real estate brokers, agents, Multiple Listing Services (MLS), builders, consumers and others involved in the real estate industry.