Exhibit 99.1
FOR IMMEDIATE RELEASE
Investor Contacts: Press Contacts:
Patrick Barry Alanna Richter
CFO, Bluefly, Inc. VP, Bluefly, Inc.
212-944-8000 ext. 239 212-944-8000 ext. 293
pat@bluefly.com alanna@bluefly.com
SOROS MAKES ADDITIONAL BLUEFLY INVESTMENT
New York, NY - June 3, 2002 -- Bluefly, Inc. (NASDAQ SmallCap: BFLY), a leading
Internet retailer of designer fashions at outlet store prices (www.bluefly.com),
announced today that affiliates of Soros Private Equity Partners had invested an
additional $1.9 million in the company. As a result of the financing, Soros'
stake in Bluefly increased from approximately 78% to approximately 83% of the
company's outstanding equity.
Under the terms of the deal, Bluefly issued 1,186,573 shares of common stock at
$1.57 per share. Bluefly also issued warrants to purchase 296,644 shares of
common stock at any time during the next five years at an exercise price equal
to $1.88 per share for a purchase price of $.125 per warrant. Bluefly agreed to
file a registration statement with the Securities and Exchange Commission within
45 days, in order to register the common stock issued as well as the common
stock underlying the warrants.
The additional Soros investment was negotiated as part of an equity financing in
which third party investors would also participate. The company does not know
when or if the third party investors will consummate their investment.
The financing reduced the $4 million standby commitment provided by Soros in
March 2002 to $2.1 million, and, to the extent that the third party investors
consummate their investment, the standby commitment would be further reduced on
a dollar for dollar basis. As a result of the financing, the conversion price of
the Company's Series B Preferred Stock held by Soros automatically decreased
from $2.34 to $1.57. In accordance with EITF 00-27, this reduction in the
conversion price of the Company's Series B Preferred Stock will result in
Bluefly recording a beneficial conversion feature in the approximate amount of
$10.2 million as part of its second quarter financial results. This non-cash
charge, which is analogous to a dividend, will result in an adjustment to the
Company's computation of (Loss)/Earnings Per Share. Soros has agreed to waive
any further reduction in the conversion price of the Company's Series B
Preferred Stock
that would result if the Company were to raise additional financing under the
standby commitment, unless a third party participates in such financing or
provides the entire amount.
The securities sold in the private placement have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered or sold in the United States unless registered under the Securities Act
or an applicable exemption from registration is available. This press release
does not constitute an offer to sell or the solicitation of an offer to buy, nor
shall there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state.
About Bluefly, Inc.
Bluefly is headquartered in New York City, in the heart of the fashion district.
Distinguishing itself with discounts of up to 75%, products from over 300
designers and a 90-day money back guarantee, Bluefly.com aims to be the world's
first full service outlet store for designer fashions. Its innovative Web site
is designed to eliminate the "hit-or-miss" aspect of off-price shopping by
allowing shoppers to see only those products that are available for sale and
match their interests. For more information, visit www.bluefly.com.
This press release may include statements that constitute "forward-looking"
statements, usually containing the words "believe", "project", "expect", or
similar expressions. These statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements inherently involve risks and uncertainties that could
cause actual results to differ materially from the forward-looking statements.
The risks and uncertainties are detailed from time to time in reports filed by
the company with the Securities and Exchange Commission, including Forms 8-A,
8-K, 10-Q, and 10-K. These risks and uncertainties include, but are not limited
to, the following: the Company's recent losses and anticipated future losses;
the Company's limited working capital, need for additional capital and potential
inability to raise such capital; security interests on the Company's assets that
have been granted to third parties; the Company's inability to accurately
forecast revenue; adverse trends in the retail apparel market; risks of
litigation for sale of unauthentic or damaged goods and litigation risks related
to sales in foreign countries; consumer acceptance of the Internet as a medium
for purchasing apparel; the risk that favorable trends in sales, repeat customer
sales, gross profit, gross margin and reduced selling, marketing and fulfillment
expenses and reductions in operating losses will not continue; risks that the
Company will be unable to reduce the levels of losses; potential adverse effects
on gross margin resulting from mark downs and allowances; the competitive nature
of the business and the potential for competitors with greater resources to
enter such business; the dependence on third parties and certain relationships
for certain services, including the Company's dependence on United States Postal
Service and U.P.S. (and the risks of a mail slowdown due to terrorist activity)
and the Company's dependence on its third-party web hosting and fulfillment
centers; the capital intensive nature of such business (taking into account the
need for advertising to promote such business); the successful hiring and
retaining of personnel; the dependence on continued growth of online commerce;
rapid technological change; online commerce security risks; the startup nature
of the Internet business; governmental regulation and legal uncertainties;
management of potential growth; and unexpected changes in fashion trends.
###