Scient Gets $9 Million Loan; Continues Fight To Survive Downturn

Scient

Monday's loan announcement follows the company's recent elimination of about $430 million in excess real estate obligations in several cities including San Francisco, New York and London.

Information released by Scient was short on details, and company executives were not immediately available for comment. During the company's most recent earnings call in late February, however, executives said the company was seeking a loan to address a liquidity issue attributed to merger-related expenses and a decline in revenue.

Scient merged with Atlanta-based iXL Enterprises on Nov. 7, 2001. As of Dec. 31, 2001, Scient reported $62 million in cash, of which $41 million was listed as "restricted."

For the quarter ended Dec. 31, Scient reported a loss of $55 million on sales of $20 million. The results that were disclosed reflect the business of Scient as if Scient and iXL had been combined for the quarter.

id
unit-1659132512259
type
Sponsored post

At the time, Scient CEO Christopher Formant outlined a business plan focused on growth, but one that hinges upon getting over several hurdles first, including the approval of the loan. Other hurdles yet to be addressed include a reverse stock split resolution, approved by the board, to be presented to stockholders sometime this quarter.

The reverse stock split resolution is aimed at boosting the company's stock price, after being placed on notice by Nasdaq for failing to meet the $1-per-share-minimum bid price required during a 30 consecutive day trading period.

According to Nasdaq's Market Place rule, the New York-based company has 90 days, or until May 15, to regain compliance. Scient faces the possibility of being delisted from the exchange if it can't comply with the minimum bid price requirements by that deadline.

Scient closed trading last Thursday at 12 cents per share, but the stock was up slightly Monday afternoon, trading at 14 cents per share. The 52-week high is 49 cents per share, and its 52-week low is 10 cents.

Meanwhile, the $9 million loan, from an unnamed financial institution, is repayable in March 2004. Its availability is "supported by guarantees and collateral given by members of the company's board of directors and a significant stockholder of the company with no board representation," according to a statement released by Scient.

The merger of Scient with iXL was designed to foster financial stability and create a stronger e-business solution provider with complementary business strengths and technical skills. Before the merger, both companies, once considered high fliers in the e-services market, had reported millions in losses, laid off hundreds of employees and consolidated offices to cut costs amid a sharp decline in market demand and a slowing economy.