CallPlus CEO buys 10pc of ihug

By ADAM GIFFORD

CallPlus chief executive Malcolm Dick has bought the 10 per cent shareholding in internet service provider ihug held by Tappenden Holdings, the investment vehicle for Alan Gibbs and Trevor Farmer.

The deal was wrapped up last week. Ihug directors signed a waiver giving up their pre-emptive right to buy back the shares, and approved Mr Dick joining the board, replacing Tappenden's Rob Campbell.

Mr Dick said he had no intention of increasing his shareholding.

"And as for CallPlus buying ihug, it's not on the cards," he said.

He would not disclose the sale price. Tappenden bought the stake about a year ago for $10 million.

Mr Dick said he had always been a part of Tappenden's involvement in ihug. He was brought in as a technical adviser early on because of his relationship with Tappenden principals through Freightways.

"With Tappenden getting out of its technology investments like Sky, ihug did not fit with its strategic goals."

He said there could be opportunities for ihug to work with other internet and telecommunications companies he has a stake in, which include CallPlus, Attica, Slingshot and i4free.

"We will look at strategic opportunities. There could be opportunities with things like bandwidth buying."

Ihug director Nick Wood said that although ihug could have bought the shares back, "we thought it was better for the business to have them in Malcolm's hands" because of the expertise he brought to the board.

He said ihug had no specific capital needs after restructuring several months ago, which involved shedding staff.

"We are working through things in the current climate and trying to make a better business," Mr Wood said.

Mr Wood also denied the Australian arm of ihug was on the market.

"There are always conversations going on, but there is nothing specific happening at the moment."

Ihug has about 75,000 ISP customers in New Zealand, and 45,000 in Australia. It has more than 200 staff across the two countries.

Mr Wood said attempts to get more investors into ihug or sell the business had gone on the back burner, as internet firms concentrate on making money in a tough market.

The Tappenden involvement with the firm grew out of an attempt by the Wood family, which owns 82 per cent of ihug shares, to sell a 30 per cent stake to Sky Television. Another attempt to raise capital through a merger with cinema operator Force Corporation fell through after Force shareholders voted against it. An 8 per cent shareholding is owned by Bart Kindt, former owner of Christchurch ISP ESNet, acquired by Ihug in 1996.

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