LAS VEGAS, Oct. 9, 2001 (PRIMEZONE) -- PurchasePro (Nasdaq:PPRO) today released the following open letter to its shareholders.
Dear PurchasePro Stockholder:
Let me begin by thanking you for your continued support of PurchasePro. As a result of the many questions we've received from our shareholders, regarding the "short" position in PurchasePro's stock, I believe it is appropriate to publicly discuss the issue.
Management believes that the current stock price is attributable, in part, to heavy pressure from "short selling" in the market. First, let me explain what "short selling" is and what we think you can do to help us, and in turn, help yourself.
In "short selling," traders sell stock they do not own by borrowing shares from a broker. If the stock price goes down, the short sellers buy stock in the market at a lower price, return the stock to the broker and systematically make a profit. By selling first and buying later, short sellers benefit from stock prices going down instead of up. Thus, their interest in our company conflicts with what most of our stockholders want, the stock price to increase.
Traders borrow stock from people like you, whether you know it or not. If your shares are registered in your broker's name instead of yours or if they are held in a margin account, your broker may lend your PurchasePro shares to "short sellers."
While many companies experience short selling in the marketplace, the amount of short selling compared to the trading volume in our stock has been unusually high. This may be contributing to the downward pressure on the price of our stock.
Therefore, we are asking all of our shareholders to do the following: Promptly call your brokers and have your PurchasePro stock taken out of street name or place your holdings into a cash account. This means that instead of your shares being registered in your broker's name or being held in a margin account, they would be registered in your name or placed in a cash account. You would still own the stock, and your ability to hold or sell the stock would not change.
By registering your shares in your name or holding them in a cash account, a short seller would not be able to borrow your stock without your permission. The only difference would be administrative, including possible paperwork and possible minor expenses you may incur in re-registering or moving your shares. This element differs from brokerage firm to brokerage firm. When you want to sell, you would have to send your broker instructions to move the stock back into street name or into a margin account, and the broker may ask you to sign some transfer documents. We think this is a small price to pay for relieving the heavy short selling pressure on our stock. You can seek to take shares out of street name or a margin account at any time, accordingly, we are asking stockholders to call their brokers promptly and attend to this issue. PurchasePro intends to work with its transfer agent and participating brokers to make the process of re-registering your shares or moving them into cash accounts as quick and easy as possible. If you have any questions about this process, please call Steve Stern, PurchasePro's vice president, corporate communications and investor relations, and he'll be happy to assist you.
PurchasePro has undertaken a number of recent steps to better its position for the future. We have a strong strategy and clear tactics to support this strategy. As a shareholder, you can help. We appreciate your consideration of this important matter and thank you for your continuing support of PurchasePro.
Regards,
Richard Clemmer, President and CEO
About PurchasePro
PurchasePro(r), www.purchasepro.com, is a B2B e-commerce leader with the stated goal of providing software to enable enterprises of all sizes to gain universal access to the world's largest commerce network. The PurchasePro commerce network comprises more than 250,000 businesses, authorized to buy and sell, and powers hundreds of private-label marketplaces. PurchasePro provides the following B2B e-commerce solutions: e-Procurement for enterprise-wide procurement; e-Source for strategic sourcing, v-Distributor for online distributors; and e-MarketMaker for Internet market makers.
This news release may include forward-looking statements, which are subject to the ``Safe Harbor'' created by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve certain risks and uncertainties that can cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements represent only the views of certain members of management and are based on limited information available to us now, which is subject to change. We have no current plan to update these statements. Actual results may differ substantially from what we say today and no one should assume at a later date that the forward-looking statements provided herein are still valid. They speak only as of today.
For more information about these risks and uncertainties, see the SEC filings of PurchasePro.com, Inc., including the section titled "Factors That May Affect Results" in its 10-K filing for the period ended December 31, 2000, and its 10-Q for the quarter ended June 30, 2001, which are available from the company on request and on the Internet at the SEC's Website, www.sec.gov. Note: PurchasePro is a service mark of PurchasePro.com Inc. All other trademarks or registered trademarks are the property of their respective owners.