a. I'd like each bidder to identify
the funds that they are relying on for the transition. Do you have money in the bank
set aside or are you relying on the third party partners or money from capital markets
for the transition?
Following capitalisation from its parent company,
Register.com, RegisterOrg has $10 million in cash currently in the bank, and can
therefore finance the transition without reliance on third party partners or money
from capital markets. Consequently, RegisterOrg is uniquely situated in that
it has the funding to work continuously towards transitioning the Registry on January
1, 2003. The delay in awarding the .org contract that ICANN announced last
week makes financial stability of the successful applicant even more critical as
it may be necessary to shorten project times and inevitably this will lead to potentially
higher costs. This type of contingency was allowed for when we capitalized
There will be very little time for the successful bidder to “ramp
up’ prior to the December 31st transfer from VeriSign. RegisterOrg has the
financial resources as well as the experience and the technology to meet that challenge.
Moreover, with the current uncertainties in the economy, RegisterOrg has the financial
stability to make a firm and lasting commitment beyond the transition, to assure
the growth and vitality of the .org domain in the long run.
b. To what extent
does your financing for the transition depend on timely receipt of all or part of
the Verisign endowment? What are your plans for alternative financing if a dispute
or a delay arises in the transfer of those funds?
does not rely in any manner on the VeriSign endowment. RegisterOrg intends
to finance the transition exclusively from its $10 million in cash resources.
We can manage a successful transition without being jeopardized by any delays or
objections from VeriSign.
c. Are you financially prepared to deal with unforeseen
costs that might arise in the transition, particularly those related to the technical
operation of the registry?
Yes. RegisterOrg’s budget is based
on our substantial experience in operating and transitioning registries. We
believe we have accurately assessed the start-up costs, and identified the potential
for unforeseen costs. RegisterOrg has taken a cautious approach in estimating
the necessary capitalization for running the .org Registry, without sacrificing its
investment in services intended to benefit the .org community. While we have
been cautious in our business planning, we think this it essential to have high funding
to guarantee stability and growth. Indeed, we believe that the ultimate operator
of .org should be able to demonstrate capitalization close to the $10 million level.
the potential costs to bidders are increasing since ICANN’s recent decision to delay
awarding the bid for one month. For many bidders, the additional costs associated
with a compressed timeline for conducting the transition activities may prove to
be too much for their limited budgets. We believe that RegisterOrg’s $10 million
cash commitment is more than sufficient to cover the transition period, including
unforeseen expenses such as delays, and still fully fund a vigorous marketing strategy
and outreach to the .org community that are critical to the growth of the.org domain.
Are you financially prepared to deal with lower than expected numbers of new names
being purchased/registrants renewing. What tolerances do you have in your cash projections
before being forced to seek further funding?
Many bidders have, in our
estimation, been overly optimistic with respect to time lines for generating revenue
and forecasting expenditures for implementing the transition. Whilst we have significant
plans to expand and revitalize the .org Registry, we are also mindful that there
is no guarantee in registrant numbers, either at handover or thereafter. Beyond anything
else, the new operator must be able to prove financial stability no matter what the
scenario. Accordingly, RegisterOrg constructed its bid under the assumption
that the operation of the .org domain would generate NO CASH REVENUE FOR SIX MONTHS
and that the number of Registrants would continue to decline in the first year of
operation. Our parent company, Register.com, which has more than $200 million
in cash and cash equivalents, is fully committed to supporting RegisterOrg as necessary
to successfully transition the Registry and grow the .org domain. Therefore,
in the unlikely event that unforeseen circumstances result in cash outflows that
exceed $10 million, RegisterOrg would not need to rely on capital markets or outside
funders to fulfill its obligations to the .org community.
I'm also concerned about
the stability of the .org registry if it goes to a bidder that is relying in substantial
part on the Verisign endowment for funding. How solid is the commitment from Verisign
to turn over the money? I understand that there is a signed agreement between Verisign
and ICANN with respect to the endowment, but what are the remedies if Verisign delays
or receives a waiver on the agreement? And most important, do the bidders relying
on the endowment have the resources to function in the meantime as well as to engage
in a legal dispute and perhaps protracted litigation?
It is difficult
to speculate on the status of the VeriSign endowment and if and when such payment
would be made to the new registry operator. Nevertheless, as we set out in
response to questions c. and d. above, RegisterOrg has the financial capacity to
operate throughout the transition phase and beyond, and will not rely in any manner
on the VeriSign endowment. We believe that this financial “self sufficiency”
is critical to the stable and successful redelegatation of .org.
Register Organization Inc.
575 Eighth Avenue
York, NY 10018
+44 207 460 4060