Pop Goes the World Online

SAN FRANCISCO (04/03/2000) - World Online's worries did not end when its much-hyped IPO tanked last week. Now that the Dutch Internet service provider's share price has plummeted to the point that the company has lost nearly half of its value, bankers and regulatory agencies are scrutinizing its filings.

The troubled company's CEO, Nina Brink, sold off two-thirds of her shares in December, just prior to the mid-March public offering. She did so by transferring the shares to an investment house, which dumped 1.2 million shares on the market in the first day of trading. Speaking with the international press before the offering, Brink had promised that her shares would not be sold. The Amsterdam Exchanges, where the float took place, has said that it will look more closely at World Online's IPO filings, but that it sees no reason to launch a full-blown inquiry.

"All of the information necessary was in the prospectus, but people didn't read the prospectus carefully," said Robert Bakker, a spokesman for the Amsterdam Exchanges. "Of course it is not forbidden to sell your shares before an IPO.

After an IPO, yes. But maybe the company should have been more clear." Despite that vote of relative confidence, negative publicity has snowballed. The Amsterdam media has discovered a reliable source of headlines: employees who had invested in the company and then, on paper at least, lost a fortune.

The company had allowed each of its 1,500 employees to take out an interest-free loan, reportedly equivalent to their annual salary, to purchase shares in the ISP. Employees borrowed a total of nearly 22 million euros ($21 million) to buy some 500,000 shares. Now that the price of the shares has fallen below the offering price, of course, the employees are on the hook.

"Most employees lost about half of their annual salary," said Bert Siebrand, a senior analyst at SNS Securities in the Netherlands. Amid mounting public resentment, several World Online employees, led by the personnel department, held an impromptu press conference Monday.

Expressing their satisfaction with the company, they affirmed their decision to buy the stock, saying they were "in for the long haul," according to a report in the Financial Times. Nina Brink, too, won the verbal support of the staff, but her share-shedding maneuver has raised the eyebrows of a few bankers.

Company officials declined comment on her sell-off, but have promised to explain all within the next few days.

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