Liquor.com adds warrants, lowers IPO price

In expectation that investors may not have a thirst for its upcoming initial public offering, the liquor e-tailer lowers its price range and offers warrants.

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Liquor.com dropped the price of its stock to $8.10 to $10.10 per share from $10.10 to $12.10 in expectation that investors may not have a thirst for its July 25 initial public offering.

Besides lowering the price range for the shares, the online liquor retailer is hoping to boost demand by adding one warrant for each share that is bought. The warrants allow investors to purchase an additional share for $10 during the next four years.

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"The reason is just market conditions," said Ray Dirks from underwriting firm Dirks & Co., which is handling the sale for Liquor.com. "Almost all Internet stocks are down between 30 to 70 percent, so we wanted to reflect that in the pricing."

Chicago, Ill-based Liquor.com operates a network of more than 130 liquor retailers. Customers can purchase liquor, beer and wine through the site and receive the products via local retailers affiliated with the network. The products listed on the site range from a $21,305 bottle of Chateau Mouton Rothschild to a $9 bottle of Rene Barbier Red Wine.

Analysts warn that online liquor companies face greater hurdles than other e-tailers due to heavy regulatory restrictions on the sale of alcohol.

"Taking any online retailer public in this market environment is tough at best. In the wine and spirit segments, it's particularly difficult due to the mass of regulatory issues," said Ken Cassar, a senior retail analyst with Jupiter Communications. "I have trouble thinking of a market that is more difficult than (this one to) ever make a profit."

Liquor.com earned $35,563 on revenues of $1.8 million in 1998 but lost $195,200 on revenues of $2.8 million last year. In the first quarter of 2000, the company lost $408,642, or 13 cents per share, on revenues of $551,831.

Despite its losses, Liquor.com is hoping to cash in on a large market. Americans spent about $113 billion on liquor in 1999, according to a report by Beverage Dynamics that was cited in Liquor.com's Securities and Exchange filing.

Liquor.com also cited a Forrester Research report that estimated that $143 billion will be spent buying products online by 2003, compared with $20.3 billion in 1998.

Liquor.com was founded in 1993 as Liquor by Wire. Competitors include Wine.com, Wineshopper.com and Drinks.com, all of which are privately held.

The company plans to raise $27.6 million through the sale of 3 million shares. About half will be used on marketing and public relations, and $5 million will be used to lease more server space and upgrade the company's technology.

Liquor.com has filed to be traded on the Nasdaq under the symbol "LIQR."