OCLC, the nonprofit organization that provides computer-based services to libraries, has reached a preliminary agreement to acquire the assets and certain liabilities of cash-strapped netLibrary. NetLibrary announced last month that it was looking for a buyer after failing to secure a new round of financing (News, Oct. 22), and OCLC was widely viewed as a likely candidate to acquire the company.
Completion of the sale will require the approval of the U.S. Bankruptcy Court for the District of Colorado, the court where netLibrary filed for Chapter 11 last week. To help netLibrary to continue to operate while the purchase process moves forward, OCLC has agreed to provide netLibrary with a loan that will be repaid following the close of the sale. NetLibrary employees have been working for $360 per week for several weeks, and its ranks have shrunk from about 230 employees in mid-October to between 120 and 130.
Jay Jordan, president and CEO of OCLC, said the acquisition "would advance our strategic directive to deliver technologies and services that support, extend and enhance the OCLC membership cooperative." The two organizations are familiar with each other's operations and have worked together in the past. William J. Crowe, chair of OCLC's board of directors, observed that 14 of OCLC's 16 U.S. regional affiliates have arrangements for libraries in their regions to purchase netLibrary resources. Crowe made it clear that OCLC was very interested in pursuing an alliance that would continue to make netLibrary's collection of 39,000 e-books available to its members. "The OCLC board of trustees has expressed its strong support for pursuing this proposed alliance with netLibrary," Crowe said.
OCLC's offer for netLibrary came shortly after the announcement that an investor group had sued the company, charging its executives with inflating sales figures to receive another round of financing. In its Chapter 11 filing, netLibrary reported assets between $10 million and $50 million and debts in the same range. Largest unsecured creditor is Innovative Interfaces, which is owed $3 million.
Based in Dublin, Ohio, OCLC provides services to 40,000 libraries in 81 countries. For the fiscal year ended June 30, 2000, the organization had revenues of $152.9 million.
