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more on netLibrary.com

Thanks to Bernie Sloan, Senior Library Information Systems Consultant at
the University of Illinois Office for Planning and Budgeting
(bernies@uillinois.edu) for the following item.  It is reproduced below
because the URL, while entirely accurate, doesn't in fact take the reader
to the article but rather to an intermediary search site, in a 2-3 step
process that is not entirely intuitive...  Ann Okerson


Here are a few more details, from last week's Rocky Mountain News:



Offer made for NetLibrary

Electronic-book firm to bring $10 million if bankruptcy judge approves its

By Janet Forgrieve, News Staff Writer

Venture capitalists valued NetLibrary at $450 million when they issued a
final funding round last year.

If a bankruptcy court judge approves the proposed sale next month, the new
buyer will get the Boulder-based electronic bookseller for about 2 percent
of that.

Dublin, Ohio-based OCLC Online Computer Library Center has offered $10
million to buy the company, along with a loan of up to $2.4 million to
keep NetLibrary going through its Chapter 11 reorganization proceedings.

In a hearing Monday, Denver Federal Bankruptcy Court Judge Donald Cordova
approved an interim loan of up to $600,000 from OCLC to pay salaries,
vendors and some other bills until a Dec. 3 hearing. At that time, the
companies hope the judge will approve the entire loan, as well as the
proposed sale.

NetLibrary Chief Executive Officer Rob Kaufman attributed the steep
plummet in the company's value largely to a weakened economy, which led to
big changes in the way investors value businesses. He also mentioned that,
at the time NetLibrary was attracting the bulk of its $110 million in
venture-capital investment, the hype about electronic-book technology was
at its height -- and investors wanted to spend on it.

That perception has cooled since, along with the economy.

When NetLibrary needed more money to keep going this fall, it first tried
the investors who had found it so attractive last year, Kaufman said. When
they declined to invest more and decided lending wouldn't provide the kind
of return they were looking for, the company began looking for a buyer.

It sent out almost two dozen letters to companies it thought might be
interested, and OCLC, actually a nonprofit, member-funded cooperative of
libraries, was one of two that seriously considered buying NetLibrary.

Other companies may yet come forward with a bid, said NetLibrary's
attorney, Carl Eklund.

NetLibrary, which boasts 7,000 library customers but has never had a
profitable quarter, owes $425,000 to its two lenders and between $9
million and $9.5 million to various unsecured creditors, said Oliver
Kimberly, the company's senior vice president of finance, in Monday's

The 3-year-old company once boasted almost 500 employees, Kaufman said.
Today, it has 127, and will likely lose up to seven "transitional" workers
once the sale closes, he said.

Several weeks before filing for Chapter 11, workers voluntarily took a pay
cut. Today, everyone remaining at NetLibrary, including Kaufman and
Kimberly, earn $9 per hour, Kaufman said.

The companies hope to have the deal completed before the end of the year.

                     November 20, 2001