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EXHIBIT 99.1
[LOGO OF US SEARCH.COM]
For Immediate Release
CONTACT:
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Company Morgen-Walke Associates Edge Communications, Inc.
US SEARCH.com Investor Relations Public Relations
310.302.6300 415.296.7383 818.719.9292
William Langley Leigh Parrish, Jonathan Schaffer Ken Greenberg
Chief Financial Officer [email protected] [email protected]
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[email protected] Financial Media Relations
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Christopher Katis
[email protected]
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US SEARCH.COM ANNOUNCES PRIVATE FINANCING FROM
PEQUOT CAPITAL MANAGEMENT
Additional Capital Will Enable Company to Leverage Core Business Strengths to
Expand Information Services Into New Markets
Pequot to Purchase 3.5 Million US SEARCH Shares From Kushner-Locke Reducing
Kushner-Locke's Stock Ownership to Under 50%
US SEARCH.com Inc. (Nasdaq:SRCH), a worldwide leader in Internet-based
information search services, today announced that it has completed a private
financing for up to $27.5 million from Pequot Private Equity Group, the venture
capital arm of Pequot Capital Management, Inc. The Company has initially
received an investment of $10 million. As part of the transaction, Pequot will
also purchase 3.5 million shares of the Company's common stock from The Kushner-
Locke Company, subject to regulatory approval.
The financing will be used to extend US SEARCH's position as a market leader in
its established consumer and business-to-business information services, increase
its customer base, and broaden its business to an expanded vision of US SEARCH
being the central 'Trust Advocate(SM)' for ebusiness transactions.
Brent Cohen, president and Chief Executive Officer of US SEARCH, said, "We are
delighted to partner with Pequot Capital and gain access to potential valuable
relationships with other companies in its investment portfolio as well as the
financial strength to move forward with our plans to develop and launch new
categories of information services for businesses and consumers. Pequot has
backed leading companies in the technology industry, and its track record is
among the best in the industry. In the current market environment for raising
capital, we
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believe that the support and involvement of such a sophisticated investment firm
is a strong endorsement of our business strategy.
"We believe there is a tremendous opportunity for expansion of the online
information services market," continued Cohen. "Fraud is the single greatest
inhibitor to the rise of ebusiness transactions and simple authentication and
credit verification services are insufficient. As the enormous demand for
information anywhere, any time evolves, the 'traditional handshake' is being
replaced with the completion of an informed decision facilitated by timely and
secure access to information to validate the trustworthiness of the transaction.
US SEARCH has the ability to leverage its core strengths and existing
infrastructure to expand the Company's services to penetrate and lead this
emerging market by providing comprehensive Trust Advocacy(SM) services for
businesses and consumers across the globe."
"With new management comprised of industry veterans, we believe US SEARCH now
has the right team to direct the Company's growth and execute its strategic
plans to be the leading enabler of trusted ebusiness transactions," said
Lawrence D. Lenihan, Jr., managing director of Pequot Capital Management.
"Pequot invests to grow market leaders, and US SEARCH has clearly established
itself as a leader in the online information services sector. The Company's core
platform of technology and capabilities provides a unique base upon which US
SEARCH can expand its business to this new Trust Advocacy(SM) market. We are
excited to participate in the Company's transition and future growth."
Under the terms of the financing agreement, assuming the Company receives the
total $27.5 million financing, the Company will have issued Series A Convertible
Preferred Stock and warrants convertible into as much as 16.1 million shares of
Common Stock. The Company has received $10 million and will receive an
additional $10 million if it meets certain performance objectives. The Company
may receive up to an additional $7.5 million upon the exercise of warrants by
Pequot. The conversion price of the Series A Preferred Stock is $1.70. As part
of the agreement, two existing directors are expected to relinquish their seats
on the Company's board of directors and Pequot will be granted two board seats.
As a result of the transaction, Kushner-Locke, which currently owns 52.6% of US
SEARCH, will have its ownership reduced to under 50% and will no longer be the
Company's majority shareholder. Assuming the Company receives the total $27.5
million financing and Pequot exercises all its warrants and converts its
preferred stock, Pequot will hold on a fully diluted basis approximately 40% of
all US SEARCH stock with Kushner-Locke holding 13%.
About US SEARCH.com
US SEARCH (Nasdaq:SRCH - news) is a worldwide leader of Internet-based
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information and risk management services. The Company provides individual,
corporate and professional clients with a broad range of information services
that help its customers make faster, safer and smarter decisions. The Company is
headquartered in Los Angeles. For more information, visit the Company's Web site
at www.ussearch.com.
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About Pequot Capital Management
Pequot Capital Management, Inc. is a 100% employee-owned, research intensive
investment fund firm, headquartered in Westport, Conn., with offices in New York
and California, and has more than $10 billion under management. Pequot Private
Equity Group is the venture capital arm of Pequot Capital Management. Pequot
focuses on the complete life cycle of a company -- from the start-up phase
through formative and growth periods, through to more mature stages, when a
company is successfully executing its strategy and, potentially, poised to
dominate a market. For more information, visit www.pequotcap.com.
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US SEARCH.com Forward-Looking Statements
This news release may contain forward-looking statements regarding future events
or the future performance of US SEARCH.com with respect to, among other things,
the expected benefits of and uses of the proceeds of the transaction with Pequot
Private Equity Group, the demand for and the availability of the Company's
services, plans for new products and services, and the affiliate marketing
program, the trust advocacy business, the benefits of agreements with third
parties, the Company's plans for expansion and growth especially in the B2B
segment, volume and trends in Web site traffic, capabilities of its technical
infrastructure, ability to achieve efficiencies and profitability, and US
SEARCH.com's ability to grow its business and expand its service offerings.
These projections and statements involve risks and uncertainties. Readers are
referred to the documents filed by US SEARCH.com with the Securities and
Exchange Commission, specifically those included in the Company's latest Annual
Report on Form 10-K and other filings with the Securities and Exchange
Commission. US SEARCH.com's actual future events or results may differ
materially as a result of risks facing US SEARCH.com or actual results differing
from the assumptions underlying such statements. Such risks and assumptions
include, but are not limited to, US SEARCH.com's ability to expand and market
its product line and service offerings, particularly those intended for the B2B
market and trust advocacy, maintain and establish partnerships and Internet
marketing arrangements, respond to changes in the competitive environment,
achieve increased efficiencies and profitability, lower acquisition costs, and
expand and improve its infrastructure, facilities and operational capacity.
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