PurchasePro auditors resign, annual meeting delayed

Thursday, Nov. 29, 2001 | 2:38 a.m.

Investors in battered e-commerce firm PurchasePro.com have presented management with an unusual demand -- buy more stock.

An individual investor from Texas, together with other investors, has submitted the proposal to the Las Vegas-based company, the Wall Street Journal reported. If it is accepted by the company, PurchasePro investors would vote on the proposal at the company's annual meeting.

When that meeting will be held, however, is up in the air. After the markets closed Thursday, PurchasePro announced auditor Arthur Andersen had resigned -- and that the Dec. 10 meeting was being postponed. A new meeting date will be announced "shortly," the company said.

The shareholders' proposal, drafted by Steve Ledford of Austin, Texas, would require Chief Executive Richard Clemmer to hold at least 1.5 percent of PurchasePro's outstanding stock, the Journal reported. That translates into 1.09 million shares -- well above the 35,000 shares he now owns.

The chief financial officer and chief operating officer would each be required to hold a 0.5 percent stake, or about 362,000 shares.

"Clemmer says on conference calls that the company has a bright future, and if he believes that like we do then increasing his holdings would send a strong statement to Wall Street," Ledford told the Journal.

But a PurchasePro official said this morning there are no guarantees shareholders will vote on the matter.

"If the proposal fills all requirements to be inserted in the proxy (statement), it will be," said spokesman Steven Stern. "There is some question whether or not you can force someone to buy stock."

However, this morning the company announced that Clemmer and CFO Mark Donachie had plans to purchase stock.

Clemmer planned to acquire 100,000 shares of stock in the next two weeks, the company said, and Donachie would spend 10 percent of his annual salary on stock purchases.

"Because of my strong confidence in PurchasePro, as well as in response the voice of our shareholder base, I am accelerating my previously stated plans to purchase stock in the open market," Clemmer said in a statement.

PurchasePro trades today at 69 cents per share, and hasn't traded above $1 per share since August. After its initial public offering in late 1999, the stock traded at one point above $80 per share.

But the stock, already suffering from the burst of the dot-com stock bubble, collapsed after PurchasePro reported a greater-than-expected loss for the first quarter of 2001 -- a loss that later was widened, as the company changed its methods for recognizing revenue.

Then-CEO Charles Johnson Jr. resigned a month later, and the company was quickly hit with numerous shareholder lawsuits that accused PurchasePro executives of making misleading statements to investors. The lawsuits have been consolidated into a single case pending in Nevada federal court.