By NZPA
|
Friday 21st June 2002 |
Text too small? |
ITC will ask shareholders to vote next month on a share placement to raise funds, and the purchase of stakes in three new businesses owned by ITC's executives for 137.5 million shares.
Shareholders will also vote on employing chief executive David McKee Wright and chief operating officer Maurice Bryham under a three year contract through their management company, Platinum Management.
Supporting the strategy will result in Mr McKee Wright and Mr Bryham controlling 41.40 percent of ITC.
The plan follows the closure of the company's overseas offices last year and "an extremely difficult period for IT Capital with Deep Video Imaging remaining as the company's only strategic asset", chief executive Mr McKee Wright said.
Earlier this month the listed info-tech investment company announced a full-year loss of $21.5 million, compared with a $5 million loss the previous year.
Mr McKee Wright said he and Mr Bryham would contribute $1.2 million towards the $3.7 million cash injection. The capital would be raised through a placement of shares at 4 cents each, and used to help fund the new investments as well as supporting 3D screen developer DVI.
DVI, which recently won a contract in the US, is not expected to become profitable for several years.
The new investments are; a 70 percent stake in Sealegs International, which is developing a motorised boat launcher; a 40 percent stake in Datasquirt, which is developing mobile phone applications based on text messaging; and 50 percent of Conceptual Solutionz, which makes light electric motors for vehicles.
Auckland-based Sealegs expects to start selling its product in the next six to 12 months; Datasquirt already has applications in the market and is rolling out new ones; and Conceptual Solutionz is at an early stage in developing a commercial product, although it would not actually manufacture the motors.
ITC has very limited reserves as its young companies continue to burn through cash, but has about $1 million in net assets. "There was a very large global structure and cost structure in place, so we've had to move fairly quickly to dismantle that and reduce IT Capital's cash burn," Mr Bryham said.
"There aren't really a lot of options for IT Capital, they need more cash and they need a strategy going forward."
Research and development remains a fairly large cost component, managed on a monthly and quarterly basis. Conceptual Solutionz and Sealegs have received some of the government R&D grants towards their costs.
ITC had diversified the company's portfolio, reducing the risk by not focusing on one market segment which it was too small to do.
"We enjoy building new companies and growing them," Mr Bryham said.
"It will be more cost effective and efficient to be based in New Zealand and be much closer to the investee companies and we're going to be a lot more involved in the companies rather than standing back as a pure investment.
The company has four staff, not counting people involved directly in the companies.
"There is still risk attached but that is the nature of IT Capital investing in new businesses, there is no certainty. The new cash that comes in secures 18 months of operating cash, plus supports the investee companies. So it means there's a fairly high degree of certainty for at least the next 18 months," Mr Bryham said.
The pair expected some of the investee companies to meet their milestones within the next year, increasing sales and perhaps reaching break-even.
Mr McKee Wright and Mr Bryham teamed up at personal computer company PC Direct, which Mr Bryham co-founded in 1989, growing revenues to $100 million before selling the business to Eric Watson's Blue Star Group for $30 million.
The duo were also responsible for the commercialisation and globalisation of start-up e-business software company, Exo-net international.
No comments yet
