TheStreet.com, Inc. (NASDAQ: TSCM) has announced that Technology Crossover Ventures has agreed to purchase a minority stake in TheStreet.com for some $55 million. The investment is to support the Company’s accelerated expansion strategy.
The breakdown of the investment is quite interesting, and it does not look like on the surface that this financing is one where TheStreet.com is giving the keys to the palace away. The investment of $55 million represents the purchase of preferred stock and warrants to purchase shares of common stock. The preferred stock converts into common stock at $14.26 per share. The five-year warrants permit TCV to purchase approximately 1.1 million shares of common stock at an exercise price of $15.686, or a premium of 10%. The preferred stock receives dividends at the same rate as the underlying company’s common shares, and has a one-time liquidation preference. We’ll try to get a full breakdown of the exact terms.
We recently noted where TheStreet.com was out diversifying from only being known for stock and financial market commentary and research. In the coming months, TheStreet.com will launch a new site, Mainstreet.com and it will also re-launch its free sites, TheStreet.com and Stockpickr.com, as it enhances its position as the premier destination for money.
"TCV" provides growth capital to late-stage private and public companies. Jay Hoag, founding general partner of TCV, will join TheStreet.com’s board of directors. It sure sounds like TheStreet.com’s acquisition path is not finished.
Shares closed down 4.2% in normal trading at $13.66 today, and the 52-week trading range is $8.20 to $14.25.
Jon C. Ogg
November 15, 2007
Jon Ogg produces the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers.