Bermudians buy a front-row seat

By PETER GRIFFIN

A 40 per cent chunk of 3D software company Virtual Spectator is sailing away to Bermuda.

It has been sold to an investment group based in the North Atlantic tax haven.

And in another deal Virtual Spectator's majority owner, Endeavour Capital, has bought Australian sports graphics company Pineapplehead.

This has upset Dunedin company Animation Research.

A 2001 deal between Animation Research and Virtual Spectator allows both companies to use the Virtual Spectator name and technology.

Animation Research limits its use of the brand to its work on television sports graphics including sailing, golf and cricket.

Virtual Spectator International restricts its use of the brand to internet products, but can move into TV graphics for soccer and motorsport.

Animation Research was not told of the acquisition of Pineapplehead, which specialises in TV graphics, and believes Virtual Spectator will compete with it for work in providing TV graphics for sporting events.

Its managing director, Ian Taylor, said it made no difference that Pineapplehead had been bought by Endeavour and not Virtual Spectator directly.

He still saw room for conflict that could violate the agreement between the companies.

"We're now forced to take legal advice on how that structure impacts on our exclusive licence. It's going to be difficult for this licence to be honoured in the way it was envisaged."

Taylor wants Virtual Spectator to provide evidence it is not planning to move into sports graphics and would refer any TV graphics opportunities it came across to Animation Research as agreed.

An examination of the licensing agreement would determine whether Virtual Spectator could use its technology under the Pineapplehead brand to enter the TV graphics market.

Virtual Spectator and Animation Research shared technology to provide internet animations and TV graphics for the Louis Vuitton Cup and the America's Cup.

Both companies provide graphics internationally for a range of sports.

Endeavour Capital chairman Neville Jordan, said Animated Research had no reason to feel threatened by the Pineapplehead acquisition.

It was a "totally different transaction", and the agreement with Animation Research would continue to operate.

Endeavour paid $700,000 for Pineapplehead, which is expected to report a small loss for the current year.

The rest of Pineapplehead, which is listed on the Australian stock exchange, will be renamed Lako Vision and will concentrate on technology distribution.

It is understood Pineapplehead's staff will remain in Australia.

In February, Virtual Spectator said it intended to move to the unlisted securities market in a bid to raise $1 million.

But executives from Investors Guaranty Fund were in Auckland for the America's Cup and were "blown away" by Virtual Spectator's technology.

They offered to buy 40 per cent of the company, believed to also be worth around $1 million.

Investors Guaranty Fund executives Douglas King and Douglas Love are on the board of Virtual Spectator.