Seneca Investments to Acquire Organic

Organic, a struggling public e-services company based here, reported late Tuesday it received a proposal to be acquired by Seneca Investments, an e-services holding company.

Mark Kingdon, CEO of Organic, said in a released statement that the proposal has been forwarded to a special committee for review. He also said the proposal is subject to several conditions and there are "no assurances it will move forward."

Kingdon was not available Wednesday for further comment. The company, however, outlined Seneca's proposal late Tuesday. Seneca, which owns 22 percent of Organic's shares, is proposing to purchase an additional 58.7 percent of Organic's outstanding shares for 33 cents per share. Organic closed trading Tuesday at 26 cents per share and has nearly 90 million shares outstanding.

Based on an earn-out formula, the purchase price for shares acquired from the company's majority stockholders would be $5.9 million, with an additional $10 million to be paid under certain conditions, including substantial improvements in Organic's operations results.

According to the terms of the proposal, Seneca would pay 33 cents per share to stockholders other than majority stockholders. That doesn't include any payouts that would result from the earn-out feature.

In late August, Organic, in an apparent attempt to help push its stock price back over the dollar mark and avoid being delisted by the Nasdaq, asked shareholders to approve a reverse stock split during a special meeting set for Oct. 19.

At the time, Organic anticipated that, pending shareholder approval, the reverse stock split would be implemented before the end of October, according to papers filed with the Securities and Exchange Commission.

In early July, Organic appealed the Nasdaq Listing Qualifications Panel's decision to delist the company for failing to meet minimum bid-price requirements. Since that time, Organic's stock has continued to trade below $1.

Meanwhile, Seneca is also moving forward with a leveraged buyout of New York-based e-services company Agency.com. Agency.com CEO Chan Suh said Tuesday the deal is on track and should be completed by the end of October.