Evine Live Inc., a multiplatform video e-commerce company, has landed several high-profile investors. The company has forged a definitive agreement to sell $10 million of common stock at $1.68 per share, to investors that include Tommy Hilfiger, Morris Goldfarb and Tommy Mottola. The initial investment is expected to close within a week.
In connection with this investment, the company said that Hilfiger and Mottola will become advisers to Evine. The investments are personal, and are not connected to the companies they are affiliated with. The price is a 10 percent discount to the previous 15-day average of the stock’s closing price. Shares of Evine, which trade on the Nasdaq, closed at $1.93 on Wednesday.
Evine merchandise extends across categories such as jewelry, watches, home, food, fashion, beauty, health and fitness and electronics. The company combines live TV, online and mobile shopping and connects with its customers via social media, including Facebook, Twitter, YouTube, Instagram, Google+ and Pinterest. The company’s live programming reaches more than 87 million U.S. homes via cable affiliates and satellite. Evine programming is also streamed live at Evine.com and on select mobile devices and Facebook.
Hilfiger is the founder and principal designer of Tommy Hilfiger, Goldfarb is chairman and chief executive officer of G-III Apparel Group, and Mottola was the chairman and ceo of Sony Music Entertainment for 15 years. Currently, he is chairman of the Mottola Media Group, partners with Dodger Theatricals, the world’s largest producer of Broadway shows and a senior adviser to L. Catterton.
Bob Rosenblatt, chief executive officer of Evine, said, “It is exciting to have these leading industry icons and executives invest in our company as we seek to build transformative alliances in this ever-evolving video commerce marketplace. This investment will help us accelerate our brand-building opportunities as well as strengthen our balance sheet.” Rosenblatt was previously chief financial officer of Hilfiger.
“We believe we can take it to a whole new level,” said Hilfiger. By tapping into the entertainment world, Hilfiger said he expects to transform the network into an entertainment-based home shopping network. “We will bring them celebrities and cool brands and more relevant brands,” said Hilfiger, who also plans to tap into his Star Branding network of celebrities.
“I think it’s a rare opportunity,” added Mottola. “We’re going to bring media and entertainment to this channel and make it cool. It’s exactly the paradigm that everyone in the entertainment business is desperately looking to align themselves with,” he said. “With music revenues from the sale of music drying up for artists, the only outlets for them is to do branded product or endorsements, the same thing with actors to a large degree. Everyone in entertainment is gravitating toward branding product they can be a part of or get a royalty from, or own a piece of, and this will be [a] giant opportunity for us,” he said.
Mottola said he’s known about this channel for years, and all of a sudden, it all came together “because collectively, Tommy, Morris and I decided we really want to do it. We went with a real strong proposal to these people, and they thought it was a great idea.” Asked to describe how this might play out, he said, “We can provide performances on the channel, maybe in a way we tie it in with a fashion show or a product line, and then be doing mobile, having video mobile units to cover people, which will be very exciting. We’re going to integrate the tricks of our trade with this, [and] the combination will be very powerful.” Mottola said there’s no better way to bring a brand’s story and vision to life than live video commerce.
The investors will receive five-year warrants to purchase a number of shares of common stock equal to 50 percent of the number of shares originally purchased in this $10 million investment. The exercise price of these warrants will be equal to $2.90 per share, a 50 percent premium to the company’s closing stock price one-day prior to this announcement of the offering. Over the last 52 weeks, shares of the company have traded as high as $3.17 and as low as 41 cents.
In addition, the investors will receive a six-month option to make an additional equity investment in Evine at a price equal to the company’s five-trading-day average price prior to the exercise of the option. If this option is exercised, the investors will also receive five-year warrants to purchase a number of shares of common stock equal to 50 percent of the number of shares purchased upon exercise of the option, and these warrants will also be priced at a 50 percent premium to the company’s closing stock price one-day prior to the exercise of the option. The total number of shares to be issued in this offering, including through the purchase of shares and exercise of the option and warrants, will not collectively exceed 19.99 percent.
The company said it expects this investment can help create strategic alliance opportunities for the company to maximize shareholder value for all its stakeholders.
Last month, Evine posted second-quarter results in which earnings per share beat Wall Street’s estimates. The company had a net loss of $2 million for the three months ended July 30, or 3 cents a diluted share, compared with a net loss of $3 million, or 5 cents, a year ago. Net sales in the quarter dipped 2.4 percent to $157.1 million from $161.1 million. Among some of the new brands are Vanessa Williams, Paula Deen, Todd English and Beekman 1802. By category, the company said beauty increased 2 percent, followed by fashion at 1 percent, while jewelry and watches declined by 7 percent.