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Webvan Declares Chapter 11 Bankruptcy

Aired July 9, 2001 - 08:32   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL LIN, CNN ANCHOR: All right, right now we want to take you live to Foster City, California, where a very early morning news conference there, where Webvan has just announced it is, in fact, declaring Chapter 11 bankruptcy.

Let's listen in.

(JOINED IN PROGRESS)

BUD GREBEY, WEBVAN V.P.: It has been declining in recent months and the preliminary results for the second quarter which ended in June showed greater than anticipated decline in revenues.

This situation has accelerated our need for new capital to fund operations moving forward. Given the harsh market for new capital, the company has been unable to secure the additional financing required to fund operations moving forward. Rather than use the balance of our cash to continue to fund operating losses, we have decided to close down our operations and to treat our employees and our creditors fairly.

Webvan has weathered numerous challenges in its short years of being in business and we've operated in a very difficult environment. In a different environment, we believe our business would have proved successful. We've thrown every ounce of our energy into bringing Webvan to life and we are very proud of our accomplishments. We also are very proud of the tremendous achievements that our employees have made.

We're walking off the playing field exhausted and a bit bloodied, but with our heads held high, knowing that we have really changed the way the world thinks about retailing. I want to thank my colleagues for all their efforts over the years in making Webvan the great company that it has been and I want to thank our customers for the loyalty. Thank you.

I'd be happy to take some questions.

QUESTION: Effectively immediately 2,000 employees will lose their jobs. You've got 4,500 employees. What happens to (unintelligible)?

GREBEY: Actually, there are 2,100 employees in the company right now. The majority of the employees will be laid off effective today. We began communicating with employees at our facilities around the country last night, notifying employees. There will be a small team of employees who will stay on during the transition to prepare for the bankruptcy filing and then for the orderly winding down of the business and sale of our assets and business.

QUESTION: Mr. Grebey, you have over a 700,000 customer base. What will happen to their personal information, their buying habits, their Web addresses, etc.?

GREBEY: That information will remain confidential with the company. Should the company move to sell any lists, customers would be notified of that and their permission asked before we would do so.

CHEN: All right, that is Bud Grebey. He is a vice president with Webvan. And as you probably know by now, Webvan is a Web-based grocery delivery service. It tried to convince people that the best way to get their food was to log onto the Internet and have them deliver it right to the front door.

The idea was kind of working for a while, kind of catching on, but they simply weren't making enough money and last April they shut down several offices, including the one right here in Atlanta, tried to reorganize and then obviously the dot-com boom went bust and a lot of that venture capital that they needed to keep going to reorganize simply dried up. Many of the employees notified last night, very late last night and quite an early and quite a sad morning out in California, Foster City, as Webvan announces that it is declaring Chapter 11 bankruptcy.

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