Rescuers to save Excite@Home?
No formal offer has been made, and no financial terms were available. But McLarty and Ranch C. Kimball, an adviser to McLarty's consulting firm, Kissinger McLarty Associates, have connections with private equity partners and have notified Excite@Home of their interest in gaining a minority or majority stake, depending on the arrangement, these people say.
Such a deal, if consummated, could help the Internet company, which is controlled by AT&T, escape a severe cash crunch that has raised doubts about its viability. Indeed, just last week the company and its then-auditor, Ernst & Young, disclosed "substantial doubt" about the company's ability to continue as a going concern.
An Excite@Home spokeswoman declined to comment.
McLarty is traveling. "Given Mack's background as a CEO and business leader before joining the Clinton administration, it's fairly natural that these kinds of conversations would draw his interest," said Richard Klein, a director at Kissinger McLarty Associates, which has offices in Washington and New York.
Nixon-Clinton connections
Kissinger McLarty Associates is an international strategic advisory firm. The firm was formed in 1999 by the merger of two organizations headed by former Secretary of State Henry Kissinger and McLarty, who served as President Clinton's chief of staff.
In addition, McLarty and some business associates that include Kimball are involved in a separate partnership that advises large corporate clients and a handful of private equity firms.
Through this partnership, Messrs. McLarty and Kimball have spent considerable time with Excite@Home executives since mid-May, when they first approached the Redwood City, Calif., company, according to people close to the matter. Kimball, who had been with the Boston Consulting Group for 15 years and advises McLarty's firm, has taken the lead role in the discussions with Excite@Home, these people said.
Excite@Home operates a high-speed Internet-access service, as well as a Web-media business supported by advertising that has been hurt by the slump in online ads. Messrs. McLarty and Kimball are particularly interested in the Internet-access business, which appeared to be stable and growing at the time they first approached Excite@Home, these people said.
On Monday, the company said one of its major noteholders, Promethean Asset Management demanded repayment of $50 million in financing, stating that Excite@Home breached the terms of a financing agreement. People close to both organizations say Promethean was upset about what it considered to be a misrepresentation of Excite@Home's financial condition at the time. Excite@Home disputes any misrepresentation and said it is in talks with Promethean to resolve the dispute.
The company' media business, which includes the Excite.com Web site (www.excite.com), hasn't met revenue forecasts amid the online advertising slump. As a result, the company has run through its cash more rapidly than it expected and twice this year warned that it would need financing to continue operations through the year.