If you wonder why BuzzFeed, having been promised some $300 million and a $1.5 billion valuation by its blank-check suitor, eventually accepted a mere $16 million and the valuation implied by the fact that almost every investor in that special purpose acquisition company said “no way” to the deal (one that has only continued to fall since), well, you’re not alone.
Nearly 80 former and current employees of BuzzFeed accused the company in complaints on Tuesday of bungling its stock market debut and denying the workers the chance to sell their shares at a higher price…. By the time of the merger in December, about 94 percent of the over $250 million raised by the SPAC was withdrawn by investors, leaving the company with only $16 million. The complaints argued that because of this, BuzzFeed executives had a fiduciary duty to re-evaluate the plans to go public. But the I.P.O. went ahead, and BuzzFeed began trading on Nasdaq on Dec. 6 under the ticker symbol BZFD.
Barring that obligation, the aggrieved employees argue, BuzzFeed at least had the obligation to put them in a position to get rid of shares that were obviously going to tank as quickly as possible. But here, too, it allegedly failed.
“The Kafkaesque tribulations through which the claimants were dragged have wreaked havoc on their financial lives,” one complaint said…. The company’s stock price fell sharply in the days after it went public, and employees say they were not able to sell their shares until the price had dropped nearly 60 percent, to less than $5.
Some workers are still unable to sell their shares, according to the complaints….
The employees, the claims said, were looking forward to finally cashing in their shares but quickly realized that they were unable to do so because they had not been told extra steps were needed to convert their Class B shares before they could sell them….
Surely some cute meme or cheeky listicle could have relayed the relevant information, but for once this was apparently not the route BuzzFeed took in attempting to disseminate facts.
Communications from Continental and BuzzFeed offered contradictory and vague advice about the stock transfers, according to the complaints, and employees were told the conversion of shares would take three to five business days.
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