The Cole Papers, Hellbox, June 2004

June 2004

Knight Ridder, Lee take equity in CityXpress

One major newspaper company said earlier this month that it had invested in a provider of newspaper on-line auctions, while another converted debt in the auction company into equity.

A division of Knight Ridder of San Jose said it has made a $2 million equity investment in CityXpress Corp., of Vancouver, British Columbia, and Lee Enterprises Inc. of Davenport, Iowa, said that it had converted $4.2 million in convertible debentures into common shares in the business.

“This financing is a strong endorsement of our strategy and position in the marketplace,” said Phil Dubois, chief executive of CityXpress. “It gives us the resources to aggressively accelerate our growth over the coming years.”

Mike Petrak, vice president of marketing for Knight Ridder said that CityXpress had “outperformed our expectations.”

Lee and Knight Ridder will become majority shareholders of the company, on a combined basis.

Petrak and Alice Wang, vice president of corporate development at Knight Ridder, will join the CityXpress board of directors, which also includes two representatives from Lee, Greg Schermer, vice president of interactive media, and Greg Swanson, director of interactive media sales.

CityXpress, said Schermer, “is delivering significant revenue now for our industry with substantially more to come.”

Lee’s investment has now been converted from loans and interest into common shares, removing $4.2 million from CityXpress’ books. CityXpress had pledged its core technologies as collateral for the loans, and, CityXpress said, this move means “shareholders will be assured that the company will retain ownership of its software assets.”

CityXpress staged its first newspaper-sponsored auction in 2001 and has now staged more than 200 event auctions for newspapers, generating more than $46 million.

CityXpress Corp., (360) 895-5374; e-mail: info@cityxpress.com.

— dmc

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Knight Ridder, Lee take equity in CityXpress

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From THE COLE PAPERS , June 2004, Copyright © 2004, All Rights Reserved.