Mexican magnate propping up CDNow
Helu to re-invest
Mexican billionaire Carlos Slim Helu has been trying to keep CDNow spinning over the past year by investing $52.8 million in the Fort Washington, Pa.-based e-tailer — and on Friday his company filed documents with the federal Securities and Exchange Commission that indicates that he may want to invest more.
Helu, under his conglomerate, Grupo Carso, is "currently engaged in discussions with CDNow regarding a possible additional investment in the company, although neither the amount, form (nor) timing of such an additional investment has been determined."
The magnate has been slowly building up his stake in the company over the past year and now owns a 9.2% stake in the company. Helu also owns computer retail chain CompUSA and is behind telecom company Telefonos de Mexico.
The urge to merge
"As we announced on March 13 … and stated many times since, CDNow is actively seeking a merger transaction or investor to replace the canceled proposed merger with Columbia House," CDNow said in a statement. "We have held discussions with a number of parties. We have held discussions with Grupo Carso regarding such a transaction and may continue these discussions in the future."
CDNow’s stock price jumped almost 21% on the news, closing at $4.69 Friday on the Nasdaq.
At the time the merger with Columbia House fell through, CDNow said they have enough funds on hand to operate the company until the end of the year. The company retained Allen & Co. to consult on future business options.
Last week CDNow reported a net loss of $37.8 million for the first quarter of 2000, with $10 million of that loss coming from merger fees in deals with N2K Inc. and SuperSonic Boom. The company also unveiled a new operating plan that it estimates will save $12 million a quarter.
