Founder Sells Most of Webvan Stake
Louis Borders, founder of Webvan Group Inc., salvaged $2.7 million by selling most of his company stake less than three weeks before the online grocer shut down.
Borders, who also started the bookstore chain that bears his name, sold 45 million Webvan shares for 6 cents each on June 22, according to a filing with the Securities and Exchange Commission. The buyer of the 45 million shares wasn’t identified in the filing.
Borders, formerly Webvan’s chairman, couldn’t be located for comment. A Webvan spokesman didn’t return a telephone call seeking comment.
Webvan on Monday shuttered its operations, putting about 2,000 employees out of work, and said it would file for bankruptcy protection.
The Foster City, Calif.-based company has lost more than $800 million since its founding in December 1996. Borders was the largest shareholder in the company, with a 10.3% stake, comprising 49.2 million shares, as of May.
Webvan shares fell 5.5 cents Tuesday to close at a half penny each in over-the-counter trading. At that price, the stock sold by Borders would have a market value of $225,000.
Borders had granted Webvan the option to repurchase more than 4 million of his shares at $8 each. However, the June 22 sale was the first reported to the SEC, according to data compiled by the Washington Service.
Whether Borders lost money on the transaction is difficult to determine.
Webvan had reported earlier that Borders purchased 14.1 million company shares at less than one-tenth of a penny each and an additional 22.2 million shares for 9.6 cents each.
As recently as June 29, the company continued to make plans to stay in business. On that day, Webvan announced that its shareholders had approved a reverse stock split designed to maintain the company’s ability to trade on the Nasdaq Stock Market.
Borders sold the stock at a discount to its market price on June 22, a detail that suggests he sold the shares through a single block transaction. Webvan shares closed at 9 cents each on the day of the sale, a 25% drop from 12 cents apiece a day earlier.
Borders continues to hold 4.2 million Webvan shares, the filing said.
