In the continuing fallout from the unbelievably bad public markets debut of VoIP provider Vonage, the company is now saying that it might not let off the hook customers who purchased pre-IPO shares but refused to pay for them.
On Tuesday, Vonage said that it would reimburse bankers for the shortfall and wouldn’t legally pursue its non-paying customer/stock buyers. But yesterday, Vonage seemed to back away from that position from its earlier posture that it wouldn’t sue customers who purchased stock but didn’t pay for their shares.
But a Vonage spokeswoman, Brooke Schulz, said on Wednesday that the company might pursue those customers who fail to pay for the stock they committed to buy.
“We’re reserving our right to pursue customers for payment,” Ms. Schulz said. She added the company would “take action should we deem it necessary.”
Memo to Vonage: Don’t do that. Not only will the 9,000 or so customers who purchased the stock because you pitched them via emails and voice mails quit your company (if they haven’t already), but the bad press is just not worth the cash.
Update: As Andrew Schmitt notes in his comment to this post, Vonage has to reimburse the brokers, so they can’t walk away from that. What they’ll do is then turn around and try to recoup their costs from the customers who failed to pay. Schmitt raises a good point — folks who thought they could make a quick buck with the Vonage stock shouldn’t get away with it. Still, if Vonage were smart, it would leave this one alone given how unusual the IPO was to begin with (direct pitches to customers) and how abysmally the stock has performed.
Cynthia Brumfield at 8:38 AM|Comments(1)
It's in the agreement with the offering Brokers that Vonage must cover them for non-payment by consumer shareholders. There's no way they can legally back away.
What Vonage is going to do is go after the consumers to recover the costs they pay to the brokers. Given the legal documentation, this will be a cakewalk.
I hope Vonage drills the folks who are unhappy they didn't make a quick buck.
Posted by: Andrew Schmitt at June 1, 2006 10:11 AM
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