Home / Knowledge / News / Fashion / RHO commits $15 mn growth equity investment to Bluefly
RHO commits $15 mn growth equity investment to Bluefly
28
Dec '09
Bluefly Inc announced that Rho Ventures has reached a definitive agreement to purchase $15 million of newly issued common stock from the Company.

“We are thrilled to have Rho Ventures as an investor in the business,” said Melissa Payner-Gregor, CEO of Bluefly.com. “Bluefly has created a large and loyal following among those in the know as the place to find in season, on-trend designer apparel and accessories at a value. With Rho's support and expertise we can accelerate our growth and reach new customers while solidifying our market position.”

Under the terms of the deal, the Company agreed to sell $15 million of newly issued common stock at a price of $1.70 per share. Approximately $4.7 million of the investment was closed simultaneously with the execution of the agreement, with a second closing for the remainder of the investment scheduled to occur during the first quarter of 2010, subject to the receipt of stockholder approval (as required by Nasdaq rules). Following the completion of the second closing, Rho Ventures will own approximately 33% of the Company's shares, on a fully diluted basis, and will become its largest shareholder.

“Bluefly has built an impressive market position as the leading, recognized brand in designer online retailing,” said Habib Kairouz, managing partner at Rho Ventures. “Rho Venture's investment strategy seeks to fund high-growth companies focused on large markets and Bluefly is no exception. Their success and future potential can be attributed to a seasoned direct-to-consumer management team, deep relationships with top fashion brands, and the fiscal prudence to manage resources in hard economic times. We look forward to working with them to ignite this next phase of growth.”

Simultaneously with the execution of the agreement, affiliates of Soros Fund Management LLC (“Soros”) and private funds associated with Maverick Capital, Ltd. (“Maverick”) converted their holdings of an aggregate of $3 million principal amount of the Company's outstanding convertible notes into shares of the Company's common stock at a conversion price of $1.70 per share.

Under a voting agreement entered into among Rho Ventures, Soros, Maverick and investment entities and accounts managed and advised by Prentice Capital Management, LP (“Prentice”), Rho and Soros each have the right to two designees on the Company's board of directors and each of Maverick and Prentice will continue to have the right to designate one member of the Company's board of directors, in each case subject to specified ownership thresholds.

The second closing is also subject to shareholder approval of an amendment to the Company's certificate of incorporation to establish a classified board of directors. Pursuant to the voting agreement, Soros, Maverick and Prentice also agreed to vote such portion of their shares in favor of the transactions contemplated by the agreements, as when aggregated with the shares already purchased by Rho Ventures, equals 40% of the outstanding shares of common stock of the Company.

Bluefly Inc


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