Bleak outlook for troubled IT Capital

By PETER GRIFFIN

Troubled tech investor IT Capital's stake in Deep Video Imaging will be significantly diluted as it opts out of a major share issue by the company.

And the company's stake in Deep Video Imaging (DVI) remains in doubt with court action looming that seeks to overturn part of IT Capital's purchase of DVI shares.

Hamilton-based DVI, the Stephen Tindall-backed technology start-up which designs 3D screen displays, plans to issue nearly 1.7 million shares at a price of $4.80 each to raise about $8 million.

The money will be used to repay loans to shareholder K One W One, Tindall's investment vehicle, with $1 million left over to undertake further product development.

IT Capital, whose sole remaining investment is a 41.55 per cent stake in DVI, will see its shareholding decrease to 19.44 per cent because of the share issue. It may drop again to 18.5 per cent when a proposed DVI share option takes effect.

IT Capital's chief operating officer, Maurice Bryham, said that court action by Power Beat and a lack of available funds meant IT Capital could not put any more money into DVI.

"We don't have any funds on hand so we'd have to look at a new capital raising."

IT Capital's share price has collapsed and the company is out of favour with the market, all but ruling out any capital raising any time soon.

In April, IT Capital revealed that Power Beat, the original developer of DVI's technology, was pursuing court action to reverse the sale of more than 370,000 shares to IT Capital in May 2000.

Power Beat wants the shares back and is also seeking damages. The outcome of the case may again alter IT Capital's shareholding in DVI.

DVI's restructure itself hinges on Power Beat losing its bid to win a separate injunction from the High Court which would prevent changes in ownership.

Power Beat alleges "oppressive conduct" in the way it was treated as a shareholder of DVI. A court hearing is scheduled for the end of the month.

Bryham and business partner David McKee Wright announced their resignation from IT Capital in May citing problems arising from the legal action and "difficulties and costs that it will pose to IT Capital going forward".

They will depart IT Capital in about four months.