Rho Ventures will purchase $15 million of newly issued common stock from Bluefly Inc., an online apparel retailer.
Under the terms of the deal, Bluefly agreed to sell $15 million of newly issued common stock at a price of $1.70 per share. Approximately $4.7 million of the investment was received upon signing the agreement, with the remainder of the investment scheduled to be received during the first quarter of 2010.
Following the second stock purchase Rho Ventures will own approximately 33% of Bluefly’s shares and will become its largest shareholder.
“We are thrilled to have Rho Ventures as an investor in the business,” said Melissa Payner-Gregor, CEO of Bluefly.com, in a statement. “With Rho's support and expertise we can accelerate our growth and reach new customers while solidifying our market position.”
“Bluefly has built an impressive market position as the leading, recognized brand in designer online retailing,” said Habib Kairouz, managing partner at Rho Ventures, in a statement. “Rho Venture’s investment strategy seeks to fund high-growth companies focused on large markets and Bluefly is no exception. Their success and future potential can be attributed to a seasoned direct-to-consumer management team, deep relationships with top fashion brands, and the fiscal prudence to manage resources in hard economic times. We look forward to working with them to ignite this next phase of growth.”
Separately, affiliates of Soros Fund Management LLC and private funds associated with Maverick Capital, Ltd. converted their $3 million stake in the company into shares of its common stock at a conversion price of $1.70 per share. Rho and Soros each have the right to two designees on the company’s board of directors. Maverick and Prentice Capital Management, which manages investor accounts that had a stake in Bluefly, will continue to have the right to designate one member of the company’s board of directors.
