Shares of the troubled financial-publishing company
Individual Investor Group
rose Wednesday after the company said it has hired investment bank
The Jordan, Edmiston Group
to explore its strategic options, including a sale of the company.
The news follows several months of speculation about how the ailing publisher would raise the estimated $6 million it needs to keep itself afloat through this year. The New York-based publisher's primary products include
magazine and the
The stock closed up 15/32, or 28%, to 2 1/8 Wednesday.
Individual Investor's decision to hire The Jordan, Edmiston Group officially confirms what media reports, analysts and the company itself have been saying for months: that the publisher is unlikely to survive unless it gets a large swift cash infusion.
The financial woes stem from the company's consistent losses, even though the losses have been narrowing as its revenue and circulation have steadily moved higher. It posted a net loss of $1.66 million in the first quarter of 2000, compared with $1.87 million for the same period the prior year. For all of 1999, the company posted a net loss $4.2 million as compared with $7.8 million in 1998.
Securities and Exchange Commission
filing May 22, the company said it "believes that its working capital will be insufficient to fund its operations and capital requirements beyond the middle of the third quarter of 2000, unless the company is able to obtain additional equity or debt financing."
Since that announcement, executives from Individual Investor had indicated that they were in talks with potential investors or strategic suitors, but have yet to announce any agreements.
"While we continue our discussions regarding potential financings, we felt that we should examine all possibilities to enhance shareholder value and have retained a premier media investment banking boutique to assist us," Jonathan Steinberg, the group's chairman and chief executive officer, said in a statement.
A spokesperson for the Individual Investor was not available for further comment.
The company was founded in 1988 by Jonathan Steinberg, son of the famous Wall Street financier Saul Steinberg.
In the past, the company has obtained financing from the elder Steinberg. But that avenue of financing is likely closed now that he has sold his
Reliance Group Holdings
insurance company to
after several steady quarters of massive losses for Reliance. The elder Steinberg also recently sold his Park Avenue apartment and a bevy of artworks and antiques.