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[sharechat] SMR and its buyback puzzle

From: Arkadii Slinko <>
Date: Sun, 30 Jul 2000 20:31:43 +1200

I had a look at the history of Strathmore to understand it. Here some
records from the official website of SMR. They raise some questions.


03/09/99 Changes in shareholders: ADV - 20%, Cullen Inv - 10% SMR acquires
Antipodes IT Ltd and its major investment in CommSoft for in return for
$172,000 worth of shares at $0.18 each. new board of directors. SMR has
$2.1m in the bank and 8.3% of CommSoft.

(Note that Commsoft is therefore valued then at $2.07m).

03/09/99 $8m cash issue announced

13/12/99 SMR buys CrediNet for $1.15m

13/12/99 Commsoft announced that it secured an agreement with Panasonic to
license its Internet enabled PABX system through the UK and  Europe.
CommSoft says, the deal worth $1.5m pa in the UK market alone.

26/01/00 SMR takes US$1m stake in Haht's Global E-Commerce Play

01/02/00 SMR invests $550,000 in Global Online Promotions with an option to
increse it to $2m.

02/02/00 SMR accelerates CommSoft Payment of its $1m convertible note. SMR
Acquires Option to purchase an additional 5% of equity for $1m, based on
the company valuation of $20m, at any time up to 29/02/00.

(The key to the puzzle must be in this paragraph! It is incredible how the
valuation of CommSoft had changed in 5 months.)

11/02/00 SMR takes US$1m stake in Genie Systems. SMR has an option to
additional 6% of equity in consideration of a further US$600,000.

22/02/00 SMR takes 30% stake in Inspar for $1.2m

24/02/00 SMR raises $6m from NZ funds

03/04/00 SMR takes 10% stake in US venture catalist Double Impact Inc for

10/04/00 SMR invests $2.0m in Soft Tech

14/04/00 Half year result includes total assets with the book value $17.7m
with liabilities being $7.2m, Capital raising of $8m was reported but not
included in the result. Shareholders' funds stand at $19m.

One hypothesis is that CommSoft has grown too big and is about to raise
some more capital which SMR is not prepared to invest in it. Remember that
CommSoft was desperate for cash in February. It is not clear how much of
CommSoft SMR currently owns. It seems that it wants to get rid of almost
all of them.  So what is wrong with CommSoft?
Maybe it is something to do with the suden jump in its valuation?

Sorry for such a long message.


Dr. Arkadii Slinko

Department of Mathematics
The University of Auckland
Private Bag 92019

Tel. 64-9-3737599 ext. 5749
Fax. 64-9-3737457

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