Troubled online grocer Peapod (Nasdaq: PPOD) saw its stock take another hit Thursday after Bill Malloy left as CEO, citing health reasons.
A $120 million financial deal collapsed, as a result.
Shares of Peapod fell 54.4 percent to 3 9/16 on Thursday morning after the company announced Malloy's departure. the former AT&T executive had been CEO for less than six months.
Peapod was negotiating to sell $120 million in preferred shares to Apollo Management, The Yucaipa Companies, Pequot Capital Management and GRP II. But Malloy was unable to meet with potential investors last week, company spokesman Jon Bigness said.
"The financing was on track, the due diligence was done," Bigness said. "The deal was really close to being completed. ... But it become evident Bill wouldn't be able to continue."
Peapod provided no details on Malloy's health, but one person connected to the company said Malloy had been working from home before being hospitalized.
Financial adviser Wasserstein Perella has been told to find alternatives, including other financing or an outright sale of Peapod.
Company co-founder and Chairman Andrew Parkinson replaces Malloy as CEO. The new Office of the Chairman includes Parkinson and two board members.
The grocer has just $3 million in cash. Last November, Malloy said Peapod had enough cash to last through the third quarter of this year.
But most of the money from the preferred shares would have been used to fund a capital expansion. Peapod wants to build central warehouses in eight U.S. markets.
Peapod recently decided to switch to the distribution warehouse model used by rivals Webvan (Nasdaq: WBVN) and Homegrocer (Nasdaq: HOMG). Previously, Peapod relied entirely on local grocers to provide product.
At least two brokerage firms downgraded Peapod shares following Thursday's announcement. J.C. Bradford and Southwest Securities cut Peapod to "neutral" from "buy" ratings.
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