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02 Jun 2007
According to documents filed with the SEC yesterday, Michael Egan, president of theglobe.com which owns Tralliance, lent them $250,000 on onerous terms to keep the company going. The terms of the loan allow him to increase the amount up to $3,000,000. It pays 10% interest, assuming theglobe had the cash to pay interest which is unlikely, and can be converted into stock at one cent per share. The filings say this loan is to provide working capital while they look for longer term financing.
The loan is secured by essentially all of the company's assets, but is junior to a $3.4 million bailout loan from 2005, so there is no meaningful collateral. The company's president is just putting in money, presumably because he thinks he can get it back out someday. (If you are a shareholder, though, I would suggest that your certificates would make attractive novelty wallpaper.)
While it's nice for the users of .travel that their domain is not going to disappear this weekend, this loan doesn't address Tralliance's fundamental problem: nobody cares about .travel, at least not enough to pay for running a sponsor that costs $500K per month. Maybe the .travel directory will start to make money, but they've had a year, and I still don't see any advantage to typing Bermuda into http://search.travel rather than Bermuda travel into Google.
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