iParty Corp. Closes $2.5 Million Subordinated Debt and Warrant Financing
September 18 2006 - 8:30AM
Business Wire
iParty Corp. (AMEX: IPT), a party goods retailer that operates 51
iParty retail stores, today reported that it had successfully
concluded its previously reported discussions and negotiations with
an institutional accredited investor and raised $2.5 million
through a combination of subordinated debt and warrants issued on
September 15, 2006. Under the terms of the financing, iParty has
issued a three-year subordinated note that bears interest at an
interest rate of prime plus one percent. The note matures on
September 15, 2009. In addition, iParty has issued a warrant
exercisable for 2,083,334 shares of iParty common stock at an
exercise price of $0.475 per share, or 125% of the closing price of
iParty's common stock on the day immediately prior to the closing
of the transaction. The agreements in connection with the financing
provide for certain restrictions, covenants and resale registration
rights with respect to the shares of common stock underlying the
warrant. The issuance of the warrant triggers certain anti-dilution
provisions of iParty's Series B, C, and D convertible preferred
stock. As a result, the outstanding shares of these three series of
preferred stock will be convertible into approximately 442,354
additional shares of common stock. The issuance of the warrant,
however, does not trigger the anti-dilution provisions of iParty's
Series E or F convertible preferred stock or any of its other
outstanding warrants. Sal Perisano, Chairman and Chief Executive
Officer of iParty Corp., commented, "We are pleased to report that
we have successfully completed our $2.5 million subordinated debt
and warrant financing. As we have previously disclosed, we have
been evaluating and assessing the amount and timing of any
additional capital that may be required to fund our operations in
2007 and beyond and, in connection with those efforts, have been
exploring various financing and strategic opportunities. We believe
that today's announcement and the capital resources that it makes
available to iParty, represents an important step towards helping
us address iParty's anticipated capital requirements. Together with
the financing that will be available to us in October when we
expect to exercise our right to convert at least $1,150,000 of
extended Amscan payables into a promissory note payable over 36
months, the financing made available to us as a result of today's
announcement will assist us in developing our operating plan for
2007 and beyond, and will help us to better support our general
operations, our anticipated infrastructure improvements, and our
continuing branding marketing efforts." About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. (AMEX: IPT -
news) is a party goods retailer that operates 51 iParty retail
stores and licenses the operation of an Internet site for party
goods and party planning at www.iparty.com. iParty's aim is to make
throwing a successful event both stress-free and fun. With over
20,000 party supplies and costumes and an online party magazine and
party-related content, iParty offers consumers a sophisticated, yet
fun and easy-to-use, resource with an extensive assortment of
products to customize any party, including birthday bashes, Easter
get-togethers, graduation parties, summer barbecues, and, of
course, Halloween. iParty aims to offer reliable, time-tested
knowledge of party-perfect trends, and superior customer service to
ensure convenient and comprehensive merchandise selections for
every occasion. Please visit our site at www.iparty.com. Safe
harbor statement under the Private Securities Litigation Reform Act
of 1995: This release contains forward-looking statements that are
based on our current expectations, beliefs, assumptions, estimates,
forecasts and projections, including those about better business
terms, future expectations of sales growth, improved gross margins,
profitability, the ability to take advantage of business
opportunities, and the industry and markets in which iParty
operates. The statements contained in this release are not
guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may differ materially from
what is expressed in such forward-looking statements, and such
statements should not be relied upon as representing iParty's
expectations or beliefs as of any date subsequent to the date of
this press release. Important factors that may affect future
operating results include, but are not limited to, economic and
other developments such as unseasonable weather, that affect
consumer confidence or consumer spending patterns, particularly
those impacting the New England region, where 46 of our 51 stores
our located, and particularly during the Halloween season, which is
our single most important season; intense competition from other
party supply stores and stores that merchandise and market party
supplies, including big discount retailers, dollar store chains,
and temporary Halloween merchandisers; the failure of any of our
systems, including, without limitation, our recently-installed
point-of-sale system and our existing merchandise management
system, the latter of which was developed by a vendor who is no
longer in business and which we are considering replacing in 2007;
the success or failure of our efforts to implement our business
growth and marketing strategies; our inability to obtain additional
financing, if required, on terms and conditions acceptable to us;
rising oil and gas prices which impact prices of
petroleum-based/plastic products, which are a key raw material in
much of our merchandise, affect our freight costs and those of our
suppliers, and affect consumer confidence and spending patterns;
third-party suppliers' failure to fulfill their obligations to us;
the availability of retail store space on reasonable lease terms;
our ability to successfully integrate newly acquired stores or to
successfully exploit strategic opportunities as a result of new
agreements we may enter or as a result of any store closures by any
of our competitors; compliance with evolving federal securities,
accounting, and stock exchange rules and regulations applicable to
publicly-traded companies listed on the American Stock Exchange.
For a discussion of these and other risks and uncertainties which
could cause actual results to differ from those contained in the
forward-looking statements, see Item 1A, "Risk Factors" of iParty's
most recently filed Annual Report on Form 10-K for the fiscal year
ended December 31, 2005 and iParty's most recently filed Quarterly
Report on Form 10-Q.
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