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Wilson Neill is to divest 'eatery' arm

By Nicholas Bryant

Friday 25th August 2000

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Back-from-the-dead form-er liquor and fishing company Wilson Neill is to dump its Cobb & Co restaurant chain to focus on its "sexy" technology business. Also on the block will be its Christchurch hotel and Auckland's legendary Iguacu bar and eatery.

The clarified single direction is a requirement of Fay Richwhite-backed venture capitalist Jump Capital's taking a 20% stake in the company. Wilson Neill director Paul Hyslop said the board was happy with the future course.

"We will sell [the hospitality businesses] at some stage as we need to be a single- focused company. You do tend to get valued by investors on your lowest common denominator and ours is probably hospitality," he said.

But in the short to medium term the hospitality component of Wilson Neill remains a vital ingredient of the company's renewed fortunes. The rollout of wireless internet via its subsidiary Radionet has a high cash-burn rate, one which presently relies on the revenues of Cobb & Co.

As the principal contributor to the company's bottom line profits of $1.45 million to June 30, with revenues of about $6 million, Cobb & Co has aided rapid growth.

"It's been a very amicable marriage but at some stage we'll have to divorce," Mr Hyslop said.

But a clean divestment with funds repatriated into Wilson Neill is not the only option. Mr Hyslop said the hospitality businesses may well be put to the same good use they provide now.

"It may be that we spin hospitality into a separate company with shares issued to existing Wilson Neill shareholders and it may well be the hospitality company finds a new IT business and incubates it," he said.

Radionet is close to exposure in Australia with "final legal details" being sorted on Wilson Neill's backdoor listing of mining company Mount Conqueror.

Some analysts have been critical of Wilson Neill's sale of the rights to Radionet in Australia as not being the most valuable option. But it does give quick exposure to that market in a business with a growing number of competitors.

"People have to remember we bought the world rights to Radionet for $2.5 million and have sold the rights to Australia only for $20 million," Mr Hyslop said.

If the Mount Conqueror deal is signed Wilson Neill will get 76% of the company and its 1000 existing shareholders and will change the name to Radionet. Jump Capital, whose main investors are Sir Michael Fay, David Richwhite and Todd Capital, is happy with the Mount Conqueror deal, according to Mr Hyslop.

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