By ADAM GIFFORD
Shareholders in IT Capital will be asked to approve a rescue plan in which its new management team will contribute private equity investments and cash in exchange for a 41 per cent stake.
In the plan to be put to the annual meeting on July 23, exo-net founders Maurice Bryham and David McKee Wright will contribute $1.2 million cash and stakes worth $5.5 million in three companies.
These include 40 per cent of mobile phone application company Datasquirt, 70 per cent of boatbuilder Sealegs International and 50 per cent of electric motor developer Conceptual Solutionz.
Bryham and McKee Wright will hold 41.4 per cent of the company, which could increase to 47 per cent if ambitious bonus targets over the next three years are met.
The pair have lined up a further $2.5 million in cash from other investors, including board member Jay Snider.
"That $3.7 million in cash is enough to support the new companies, Deep Video Imaging and ITC's administration for the next 18 months," Bryham said.
Deep Video Imaging, which is developing technologies for video screens, is the only one of IT Capital's previous investments still considered worthy of management attention. Deep Video Imaging is looking for capital in the United States.
New media company Terabyte Interactive is now trading profitably, but is not expected to make back the $8.4 million paid for it.
Investments in Streamline, Golden Orb and Virtual Spectator have been written down to zero, and Virtual Spectator's assets have since been sold to entrepreneur Neville Jordan's Endeavour Capital.
Bryham and McKee Wright's management company, Platinum Management, will be given a three-year contract to run the business.
Bryham said he and McKee Wright would be on salaries of $150,000 - a far cry from the $307,000-plus US-based former chief executive Jeff Dittus drew last year.
Their bonus plan, involving 50 million options in three tranches over 30 months, requires them to increase the share value by 35 per cent compounding in each of the next three years.
Bryham said that once IT Capital bought their stakes in Datasquirt, Sealegs International and Conceptual Solutionz, he and McKee Wright would have no outside equity investments.
"This is about aligning our interests with those of other IT Capital shareholders," Bryham said. "We only make money if the share price goes up."
An independent report on the proposal by share valuation specialist Grant Samuel said the 4c a share the pair would buy in at was at the upper end of the fair value range.
It said the amount being paid for the target companies was also fair, given that there were few, if any, early stage investment opportunities likely to accept IT Capital scrip. IT Capital traded at 5c yesterday.
Acquiring such a diverse portfolio spread IT Capital's risk, and it also got the benefit of an experienced management team whose interests would be aligned with shareholders.
Bryham said IT Capital had been too exposed to one sector.
"We couldn't rebuild it as a pure IT investment company."
IT Capital partners float rescue plan
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