Creditors holding a losing hand

By CHRIS BARTON

Unsecured creditors, who are owed about $1.2 million after the failure of Virtual Spectator, are unlikely to get a return of more than 20c in the dollar.

PricewaterhouseCoopers liquidators Vivian Fatupaito and John Waller said about half of the amount owed to creditors was to people associated directly with the company, which has been renamed International Networks (Auckland No 1).

Virtual Spectator, with associated company Virtual Spectator Yachting (renamed International Networks Auckland No 2), was put into liquidation by shareholders on May 21.

The companies specialised in producing 3D interactive animations of sporting events including the America's Cup and the World Rally Championship for use on TV and over the internet.

In their first report on both companies, the liquidators indicate that a deferred settlement related to the sale of Virtual Spectator's operations and due in May next year will provide a minimal return to creditors.

There is more gloomy news regarding Virtual Spectator Yachting, which owes Virtual Spectator $3.7 million on a loan secured by a debenture dated February 2000.

The report says Virtual Spectator Yachting stopped trading in March 2000 and is unable to repay its debt to Virtual Spectator - giving a combined total debt for both companies of $4.9 million.

Added to Virtual Spectator's bottom line losses for 2000 and last year of $3.2 million and $4.7 million respectively, that indicates the company has lost $12.8 million since it began in 1999.

The minimal likelihood of a return to creditors suggests that the Neville Jordan-headed Endeavour Capital, which bought Virtual Spectator's operation on May 10, got a bargain - probably paying less than $1 million. The sale price has not been disclosed.

Jordan is hoping the company will rise from its ashes as Virtual Spectator International - a subsidiary of Endeavour Capital.

But a big portion of Virtual Specator's business - TV animations for the America's Cup, golf and cricket - is now in the hands of Dunedin-based Animation Research, which had a 19 per cent stake in the company.

Director Ian Taylor confirmed that before the sale to Endeavour Capital, Animation Research bought back the TV animation business "for everything except rallying".

He also paid off debt from those operations, but declined to say how much that was. Several development staff previously employed by Virtual Spectator now work for Animation Research.

Under the tighter fiscal control of Endeavour Capital, Virtual Spectator International has pared staff and is concentrating on building subscription revenue from internet coverage of the America's Cup and the World Rally Championship.