Liquid Audio's Board Votes for Stockholder Cash Payout

The Board of Directors of Internet music company Liquid Audio voted unanimously on Monday to approve a $57 million stockholder cash payout after the Board approved a cash distribution of $2.50 per share to its shareholders. This leaves the company free to sell or liquidate its assets, the C.E.O. of Liquid Audio reported on Monday. Liquid Audio, a software maker and proprietary provider of digital music over the Internet, went public in 1999, and in its IPO and secondary offering several months later, Liquid Audio raised $173 million. Even after the tumultuous stock market technology ups and downs since then, at the end of last quarter, Liquid Audio filed reports with the S.E.C. that it had on hand $81.4 million in cash.

The C.E.O. of Liquid Audio, Ray Doig, claims that the cash distribution does not mean that there will immediately be big changes within the company. He claims that the digital music services provided by Liquid Audio will continue until a buyer for the company can be found, preferably one who wants to buy the company as a whole. "Until we have a clear path as which way is best to go for the shareholders, it's business as usual," he said. "We're not under any financial pressure to turn the lights off."

However, the lights aren't burning as bright as they once were. A planned merger with media distributor Alliance Entertainment Corporation failed recently after several dissident shareholders blocked the planned merger. Liquid Audio sued the blocking shareholders, but has since dropped the suit. The company's two co-founders both resigned and left Liquid Audio last month after the failed merger, and layoffs have reduced the company's staff to about 30 employees. But as an Internet music provider, Liquid Audio is still a viable player and a distributor of digital downloads.

Liquid Audio's cash payout is becoming a popular path for companies to follow, according to Jeff Greiner, Co-Head of Global Technology at RBC Capital Markets, "They're happening because there is either too much cash in the business than the current business calls for, or there is interest on the part of shareholders to realize some liquidity."