Gibbs and Farmer tipped to join ihug

By GEOFF SENESCALL

The same businessmen at the centre of the failed deal to sell part of internet services company ihug to Sky TV are understood to be stitching up a replacement deal for themselves.

Tappenden Holdings, the private company of Alan Gibbs and Trevor Farmer - which also owns 1 per cent of Sky - is thought to be involved in the purchase of shares in ihug. An announcement is expected shortly.

The pair expressed their interest in ihug last year when its owners Nick and Tim Wood were looking to sell 30 per cent of the company to a new shareholder.

They were believed to have taken the deal to Sky, where Mr Farmer is a director.

However, it is understood that while Sky directors were keen on buying into ihug, the company's executives were not, so in September the deal fell over.

Since then, rumours have surfaced about the possibility of an ihug float, but now it appears the company has resurrected the idea of raising new capital for expansion through a private placement of shares.

Ihug has around 100,000 customers and is estimated to be worth more than $150 million.

In addition to its internet customer base, the company is also a significant wholesaler of internet bandwidth in Australia.

It also operates SatNet satellite internet services and an online travel business.

Last week industry speculation had E-ventures, jointly owned by Rupert Murdoch and Japan's Softbank, as a possible investor, but this has been denied by E-ventures chief executive Cindy Mitchener.

Other interested parties were thought to be MCI Worldcom and Softbank-controlled Asia Online.

Mr Gibbs has been spending much of his time in the US since he and Mr Farmer sold their controlling interest in courier operator, Freightways, to Ausdoc. While there Mr Gibbs has been devoting time to a venture which is developing an amphibious car.

The deal with Sky seemed to be falling apart within days of being announced, after ihug won its first internet television contract with the Jet Inn near the airport, at the expense of Sky.

After the proposed placement collapsed, a note to brokers from Sky blamed the $500,000 salaries the Wood brothers were seeking.

However, at that time, ihug director Nick Wood said the collapse of the deal "leaves us happy people."

"We realised it wasn't going to work. They wanted different things. Their focus is on New Zealand.

"We focus on New Zealand and a few other places, and we have a more diverse product range than Sky was prepared to go with."