FOSTER CITY, Calif. -- Internet grocer Webvan here said last week that it is terminating operations in Atlanta as part of its restructuring efforts.
r's first quarter.
In related news, Webvan said last week:
The company has named Robert Swan, formerly chief operating officer, chief executive officer, replacing George Shaheen, who left earlier this month.
The company has engaged Goldman Sachs & Co., New York, to assist in its restructuring and financial strategies.
The company needs an additional $25 million to get through the first half of 2002.
The company plans to offer a 25-1 reverse stock split, subject to shareholder approval at the Webvan annual meeting scheduled for June.
Commenting on Webvan's financial situation, Swan said, "With the approximately $115 million in cash, cash equivalents and marketable securities on hand at the close of the first quarter 2001, we will need $25 million in capital to pursue a fully funded business plan, allowing us to fund operations up to the point when the entire company is cash-flow positive. We currently anticipate reaching this cash-flow milestone in the second half of 2002."
Ceasing operations in Atlanta will result in 400 employee terminations, according to the company. Webvan said it will eliminate 885 total positions throughout the company, about a quarter of its staff, as part of cost-cutting measures.
"While we regret the impact this decision has on our loyal customers in the Atlanta area, we firmly believe that this is a necessary and right step for the long-term viability of Webvan. In light of our business priorities, we believe that the company's resources can be more effectively and efficiently utilized to bring our other markets to profitability," said Swan.
In the first quarter, ended March 31, Webvan said its Fullerton, Calif., fulfillment center finished the quarter with positive cash flow, the first unit to do so.
"Passing this milestone is a significant accomplishment for Webvan, proving the viability of our business model and clearly demonstrating our ability to run a profitable enterprise," Swan said.
The company reported a net loss in the quarter of $217 million, compared to a pro forma net loss of $101 million in the previous first quarter.