iiNet profit for investor

By PETER GRIFFIN


Internet and telecoms entrepreneur Malcolm Dick has sold his stake in ihug's new owner, iiNet, cashing in for an estimated A$8.3 million ($9.5 million).

Dick, who inherited nearly 2.8 million iiNet shares when the Perth-based internet provider bought ihug in September, sold his shares around the time of the finalisation of the ihug purchase in October.

He is understood to have off-loaded his 4 per cent stake at a price of A$3 per share.

Yesterday the shares closed at A$2.94, up from the A$2.81 they were trading at after the announcement of the ihug deal. But in the intervening period, the share price rose as high as A$3.28 as investors clamoured to buy the stock.

IiNet bought ihug for A$30.1 million in cash and 23.7 million iiNet shares priced at A$1.75, which were distributed among ihug's shareholders - founders Nick and Tim Wood, their father John Wood, Bart Kindt, Dick and Deep Blue Corporation among them.

Dick bought out Tappenden Holdings' 10 per cent stake in ihug in 2001 for an undisclosed amount, thought to be round $10 million.

With the share sale and his portion of the cash settlement, Dick's involvement with ihug - a competitor to his own tolls and internet business - has proved profitable.

"We will have got more than our full investment back so yes, we're pretty happy with that," he said.

Iinet shareholders were told at their annual meeting late last year of the election of former Terabyte director, Virtual Spectator chairman and chief executive, Lindsay Fergusson.

Last year iiNet reported revenue of A$40 million and a profit of A$5.2 million. It paid a dividend of A5c per share.

Iinet is a prime candidate to take advantage of the Commerce Commission's DSL unbundling provisions should they be rubber-stamped by Communications Minister Paul Swain.

Unbundling has helped it become a major DSL provider across the Tasman.

Dick acknowledged that players such as iiNet and his own internet arm, Slingshot, had something to gain from the unbundling recommendation but was dismayed at its narrow scope and limitations thrown in that appeared to "protect Telecom".