By Joe Helm
The transformation of IT Capital from an investor in Vietnam to a venture capital company operating in the technology sector was completed at a series of meetings in Auckland yesterday.
The transformation process began in December when Iddison Vietnam changed its name to IT Capital Ltd and said it would sell most of its assets in Vietnam to concentrate on investment in the New Zealand and Australian technology sector.
IT Capital did not sell all its Vietnamese assets, keeping some management contracts, a number of former Vietnamese subsidiaries which will be liquidated and furniture and equipment.
The remaining assets in Vietnam will be ring-fenced for present shareholders in IT Capital.
That will be done by the transfer of the remaining Vietnam assets to a new company called Iddison Holdings Ltd (IHL). The sale price is $670,967, which IHL will satisfy through issuing IT Capital 2,638,868 fully paid shares.
Shares will be transferred to IT Capital shareholders on a pro rata basis in consideration for the cancellation of 11 per cent of their shares.
IHL will not be listed on the New Zealand Stock Exchange, but its shares will be tradeable over the counter through the secondary market for unlisted securities.
Among the Vietnam assets sold to IHL are interests in several gold prospecting joint ventures, joint ventures in poultry and concrete products, shares in a Vancouver listed explorer seeking gold in Vietnam and $199,575 in cash.
Yesterday's meetings also approved a nine-for-eight share split, the issue of up to 40 million new shares at not less than 7c a share, the underwriting of that issue by DF Mainland and the issuing of 600,000 options to them.
Existing 50c and 35c options have been replaced with 17.5c options exercisable by October 27 next year.
IT Capital shares were 5c lower at 18c on the New Zealand sharemarket yesterday.
David Seton, managing director of IT Capital said the company was involved in venture capital, not adventure capital.
IT Capital would look for deals ranging from $500,000 to $2 million in technology companies here and in Australia.
It would look at companies that were already established and needed to take the next step.
"Commercialisation and internationalisation of products is the aim of the deals we want to do," said Mr Seton.
He predicted most investment would be in the software and Internet arenas, "not the lunatic fringe".
Shareholders will be hoping IT Capital has more success in technology investment than it did during its years as an investor in Vietnam.
Iddison raised $4.5 million in a public share and option issue in August 1994.
Since then it has never made a profit and never paid a dividend.
However, prospects for a dividend from IT Capital in the next year or two do not appear bright.
Director John O'Hara said IT Capital was modelled on US technology venture capital company Safeguard Scientifics, which had never paid a dividend.
Safeguard invests in companies and takes them to the stage where they seek sharemarket listing. Its shareholders are offered preferential rights to shares in those companies when they list.
Venture move complete for former Vietnam investor
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