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Dutch investigators raided the offices of Internet service provider World Online International NV and several private homes Monday in connection with suspected insider trading prior to the company’s March listing on the Amsterdam stock exchange. A spokeswoman for World Online confirmed the search by Dutch law enforcement officers but declined to say what documents had been taken or specify whose homes had been entered. She repeated a written statement in which the company said it is “fully cooperating with the investigation.” World Online’s stock price fell as news of the raid placed a cloud over the recent proposed 5.9 billion euro ($5.09 billion) takeover of the beleaguered Dutch company by Italian Internet and telecommunications giant Tiscali SpA. Shares of World Online dropped Monday 8.2% to 12.30 euros, still off the year low of 9.50 euros Oct. 11. The prosecutor of the Justice Department in the Netherlands started an investigation of World Online after a class action suit was filed on behalf of an estimated 20,000 disgruntled investors. This was confirmed Monday by a spokesman for the Amsterdam district court. World Online listed March 17 in Amsterdam. The stock debuted at 43 euros, and after rising to a high of 50.20 euros in early trading, fell back to close the first day just above the launch price. But the company’s share price suffered after it was hit by scandal surrounding former founder and chairwoman, Nina Brink. She allegedly sold a large tranche of shares for $6 prior to the launch, effectively evading a six-month lock-up period. That sent the share price plummeting to 13.80 euros April 5. Two days before, Brink admitted she had sold 15 million shares at $6 per share. She then reportedly resigned under pressure and was replaced in June by James Kinsella, an American and former president and CEO of MSNBC.com. Kinsella was also a Microsoft Corp. vice president. In her defense, Brink and World Online claimed the sell-off of shares was stated in the launch prospectus. But investors said the wording in the prospectus was too vague to be understood by investors. The lawsuit brought by the investors named the company and lead managers of the bourse launch, ABN AMRO bank and Goldman Sachs & Co., alleging an estimated loss of more than 300 million euros because of the decline in the share price. In early September, Tiscali launched an all-share 20 euros per share bid for WOL, valuing the company at 5.9 billion euros at that time. However, the final price is likely to be lower, following sharp falls in Tiscali’s own share price. In the second week of this month, the share-swap bid valued WOL shares at 18 euros. The final value of the bid will depend on the Tiscali share price 10 days before the completion of the bid. A spokesman for Tiscali declined to comment on whether the raid will affect Tiscali’s bid for the Dutch company. However, Tiscali’s bid prospectus includes several pull-out clauses, including one covering any legal prosecutions in which WOL may be embroiled. The spokesman declined to say whether Tiscali is likely to invoke this clause if WOL is involved in criminal proceedings during the bid period. The prospectus also revealed that directors and members of the WOL supervisory board had received low-priced options immediately prior to the company’s listing. Copyright (c)2000 TDD, LLC. All rights reserved.

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