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Ottawa Citizen: Rebel without a company

Sep 12, 2001, 14:30 (3 Talkback[s])
(Other stories by James Bagnall)
"In the end, with his company hanging by a thread, Rebel.com chairman and majority owner Mac Brown didn't recognize his peril. He was in his lawyer's office in downtown Ottawa on July 6, wrapping up a three-hour conference call with Fuji Xerox executives based in Tokyo and Palo Alto, California. It was the latest of a series of talks over the terms of a proposed partnership that carried huge possibilities for Rebel. Fuji Xerox is $7.9 billion-a-year conglomerate that markets digital colour copiers and other office technologies. The Japanese firm wanted to market Rebel's flagship computer server, the NetWinder, to its own customers in Asia.

The key provision of the proposed deal was that Fuji Xerox was prepared to invest heavily in Rebel's NetWinder unit -- the line of small business computers Brown acquired from Corel in exchange for roughly $5 million worth of Rebel shares early in 1999.

Negotiations had been running off and on for nearly eight months. The Fuji Xerox team had examined Rebel's operations and technology to the point of exhaustion. Brown and his colleagues were convinced Fuji Xerox was ready to sign. But the July 6 call should have set off alarms. The Japanese were questioning Brown about the pricing details of the proposed licensing agreement. They also wanted Rebel, not Fuji Xerox, to pay the Japanese withholding tax applicable to future sales of NetWinder products in Asia. Brown figured that arrangement could mean a substantial reduction in Rebel's profit margins."

Complete Story (Part I)

Part II

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