Excite owes Intuit $50 million
A regulatory filing reveals that Excite borrowed $50 million from Intuit last month to fund its major deal with Netscape.
The disclosure comes in the wake of Excite's agreement to pay Netscape $70 million as part of a two-year deal to offer cobranded services online. The deal marked one of the largest online agreements to date.
"The company has paid $50 million and will pay an additional $20 million by June 30 as a prepayment of its obligations under the Netcenter agreement," the filing with the Securities and Exchange Commission said. "The company borrowed $50 million from Intuit in April to fund the $50 million payment to Netscape."
The remaining $20 million will be provided by the company itself, an Excite spokeswoman said.
Excite reported it had $26 million in cash, cash equivalents, and short-term investments at the close of its most recent quarter ending in March.
Excite muscled its way into a two-year $70 million contract with Netscape, beating out others such as Infoseek and Lycos for the Netcenter deal earlier this month,.
The deal is part of Netscape's push to turn its Web browser market share into a revenue-generating point of entry to the Internet. In April, the company announced a 60-day campaign to build out its Netcenter property as a full-scale portal to compete with established sites such as Yahoo. The Netscape-branded search site, powered by Excite, is expected to launch by the end of next month.
Many analysts had wondered where Excite got so much money to complete the Netcenter deal. It faced intense competition.
An Excite executive declined to comment on the loan, although its purpose was spelled out in the government filing.
"Basically, we have a strong relationship with Intuit and we borrowed the money for use for strategic opportunities," Excite executive vice president Brett Bullington said. He declined to elaborate.
The loan from Intuit bears interest at 5.9 percent per annum and is due no later than October 30, the filing said.
Intuit paid about $40 million for nearly a 20 percent stake in Excite last June, which prompted the search engine company to cancel a much-anticipated secondary offering. Intuit bought 2.9 million shares of Excite common stock, based on a fixed price of $13.50 per share.
At that time, the companies also announced a seven-year agreement to program, promote, and distribute an online financial channel, dubbed Business and Investing by Quicken, that would feature information and services to help consumers organize and manage their personal finances.