Financially Ailing ShopNBC Looking To Raise Up To $75 Million In Stock Offering

Financially strapped ShopNBC is looking to potentially raise $75 million through a stock sale.

ValueVision Media, parent of the No. 3 home shopping network, filed a so-called “shelf registration,” or S-3 form, Monday with the Securities and Exchange Commission for the stock offering. ShopNBC declined to comment.

But in its filing the company said that if it doesn’t stem its losses, “We could reduce our operating cash resources to the point where we will not have sufficient liquidity to meet the ongoing cash commitments and obligations to continue operating.”

Through a shelf registration, a company can fulfill certain SEC-mandated registration-related procedures before offering shares to the public, which permits the company to go to market more quickly when they are ready to do the public offering. The company essentially puts stock shares “on a shelf” in case it needs to raise capital for any reason.
We have a history of losses and a high fixed cost operating base and may not be able to achieve or maintain profitable operations in the future.

In its filing, ShopNBC said it had operating losses of about $41.2 million, $88.5 million and $23.1 million in the years ended January 30, 2010 (“fiscal 2009”), January 31, 2009 (“fiscal 2008”) and February 2, 2008 (“fiscal 2007”), respectively.

It also reported a net loss of $42 in fiscal 2009 and a net loss in fiscal 2008 of $97.8 million.

“While we reported net income of $22.5 million in fiscal 2007, this was due to the $40.2 million pre-tax gain we recorded on the sale of our equity interest in Ralph Lauren Media, LLC, operator of the website,” the S-3 filing said. “There is no assurance that we will be able to achieve or maintain profitable operations in future fiscal years.”

ShopNBC said it has high fixed costs, primarily driven by fixed fees on the merchandise it sells to cable and satellite operators in exchange for distribution.

“In order to operate on a profitable basis, we must reach and maintain sufficient annual sales revenues to cover our high fixed cost base and/or negotiate a reduction in this cost structure,” the filing said. “If our sales levels are not sufficient to cover our operating expenses, our ability to reduce operating expenses in the near term will be limited by the fixed cost base. In that case, our earnings, cash balance and growth prospects could be materially and adversely affected.”

ShopNBC reported that it has limited unrestricted cash to fund its operations, $20.9 million as of May 1, 2010 (with an additional $4.9 million of cash that is restricted and used to secure letters of credit and similar arrangements).

“We expect to use our cash to fund any further operating losses, to finance our working capital requirements and to make necessary capital expenditures in order to operate our business,” the filing said. “We also have significant future commitments for our cash, primarily payments for our cable and satellite program distribution obligations and redemption of our Series B Preferred Stock. If our vendors or service providers were to demand a shift from our current payment terms to upfront prepayments or require cash reserves, this will have a significant adverse impact.”

It appears that ShopNBC’s shareholder GE Capital Equity will have to approve the offering, according to an 8-K that the network filed with the SEC in June.

“On June 10, 2010, our board of directors authorized the filing of a shelf registration statement on Form S-3 with the Securities and Exchange Commission covering the sale by our company of up to $75,000,000 of securities, including common stock, preferred stock, warrants, units and stock purchase contracts,” the company said in that filing. “Our shareholders agreement with GE Capital Equity Investments, Inc. (“GE Equity”) and NBC Universal, Inc. require the consent of GE Equity in order for our company to issue new equity securities and to incur indebtedness above certain thresholds, and there can be no assurance that we would receive such consent if we made a request.”

ShopNBC’s largest shareholder, NBC Universal, back on June 24 decided not to sell its 6,452,194 shares in the home shopping network “due to prevailing prices.”

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8 Responses to “Financially Ailing ShopNBC Looking To Raise Up To $75 Million In Stock Offering”

  1. stefF Says:

    i daresay, those who dont like the new SHOPNBC will not be looking to buy stocks……in this company……..i would say they definitely lack vision, even though “vision” is in their name…..more like PoorVision”…..”LackVision”…, no, no……..they dont get it…….

  2. Hugh Jee Says:

    ShopNBC sells watches and nothing but watches for 24 straight hours….and then they wonder why they’re losing money? How many timepieces does one person, male or female, really want or need?

    Why not just tape the shows and repeat them on continuous loop, and give most of the staff a day or two off? Few (if any) of the viewership would care ….maybe some wouldn’t even catch on.

  3. Joanie-B Says:

    Their show hosts have seen this coming and I hope all of them have made contacts elsewhere. Some will make the jump more quickly than others.

    What a shame that they lowered their standards back when they were the only really high-end shopping network, and subsequently lost so many of their unique Vendors.

  4. betterskills Says:

    Actually, ShopNBC is not selling highend watches – Croton, Sthurling, XO Skeleton, Android – these are all mostly Chinese.

    Take their big cash cow, Invicta. Recently it was revealed that watches marked Swiss, which both the company CEO who cohosts, as well as host like Jim Skelton have touted for years, are actually made in Asia. The latest fiasco, which I’ve blogged about, has Invicta selling a watch that they claimed had diamonds. Problem is a member of Jim Skelton’s watchgeeks website revealed that when he took one of the timepieces to a jewler to replace a diamond that had fallen out, he was informed that they were crystals. ShopNBC responded by taking down the videos of the archived shows!

    Google Invicta, Jim Skelton, ShopNBC – you’ll be shocked at what you find…

  5. » Blog Archive » ShopNBC Prepares to Raise Up to $75 Million in New Stock Offering Says:

    […] base and may not be able to achieve or maintain profitable operations in the future.”  Homeshoppingista Jul. 26, 2010 Tags: ShopNBC, ValueVision Media, […]

  6. ralph lauren shirts Says:

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