ICG avoids proxy fight
It bought back $31.5 million in bonds from Mason Capital, whose stake dropped to 3.1 percent from 9.5 percent.
Internet Capital Group Inc. dodged a proxy fight with activist hedge fund investor Mason Capital Management L.L.C. by paying $31.5 million to buy back bonds from the firm.
Mason Capital sold the convertible debt to Wayne-based Internet Capital and agreed to cease seeking changes in management or the board of directors, according to a filing yesterday with the U.S. Securities and Exchange Commission.
Mason Capital, based in New York, said Jan. 22 that it increased its stake in Internet Capital to 9.5 percent of shares outstanding, including the debt, and considered seeking board seats. The announcement helped drive Internet Capital stock up 11 percent through Monday.
Internet Capital's market capitalization reached $45 billion in January 2000, eclipsing the value of General Motors Corp., as investors sought stakes in small software and Internet companies that Internet Capital held through venture-capital-style investments. The company's value plunged 99 percent in the subsequent Internet stock bust.
Shares of Internet Capital fell 1 cent, to $11.37, on the Nasdaq.
The bonds were convertible to Internet Capital shares worth $9.108, according to the filing.
Internet Capital said yesterday that it paid Mason Capital and another investor it did not name a total of $37.1 million to retire the $26.6 million face-amount convertible bonds due in April 2009.
The move was part of a long-standing strategy to pay down debt, Internet Capital spokeswoman Karen Greene said in an interview. She declined to say whether Mason Capital's threatened proxy fight influenced the timing.
"We've been very eager to repay our debt," Greene said. "The intent and interest was always there, it was about getting to the right price."
Internet Capital had been in discussions with Mason about the debt since about last May, Greene said, declining to be more specific. Selling the bonds dropped Mason's stake to about 3.1 percent, according to the filing. Jonathan Gasthalter, a spokesman for Mason Capital, declined to comment.
