Video stake ejected by ihug

By MICHAEL FOREMAN

Ihug managing director Nick Wood has denied that he was forced to sell a 51 per cent stake in the VideoEzy video rental chain to improve his company's cash position.

Mr Wood said the stake had been sold back to the original shareholders associated with the investment company, Tappenden Holdings, several months ago.

He said that was done because the shareholding was no longer necessary after ihug's aborted attempt to merger with Force Corporation last year

He would not reveal the value of the sale or whether the consideration was less than ihug paid for the stake in April last year.

But suggestions that ihug has been short of cash have been circulating for much of the year.

They gathered momentum in August when ihug offered its customers a further $100 credit in return for making a $199 pre-payment on their accounts.

Mr Wood said the internet industry was going through "interesting times" but ihug's core business was viable.

He said ihug's competitors, including Telecom's Xtra, were now charging realistic rates for their services and this year would bring a shift away from commodity internet pricing.

"We are moving towards adding value by providing extra services such as our I-Spy product, which guarantees internet users virus-free e-mail."

He said Ihug would not be selling its 50 per cent share in the e-mmediate online delivery service, which was a joint venture with Dave Fermah, the owner of the Fermah Group chain of 30, mainly franchised, video outlets.

Mr Wood said the first e-mmediate neighbourhood hub, which allowed internet users in the Ponsonby area to order fast food and other merchandise from local outlets, would soon be joined by hubs in Mission Bay and the Newmarket-Parnell areas.

"It's been through its proof of concept phase and it's now in the rollout phase."

The Ponsonby hub now offered goods from 13 outlets compared with eight at the beginning and was receiving "real levels of demand", although some products such as the stationery, from the local Paper Plus stationery store, had not sold well.

"Paper Plus didn't really work. It may be that it needs a bigger range of products to be offered at different times of the day.

"The food and alcohol combination at night is the one that seems to be working best."

While most e-mmediate customers were individuals, the service was starting to have a corporate dimension as businesses within the catchment area were increasingly using it to order food.

Mr Wood said the corporate side of the business could be extended with services such as 24-hour inkjet cartridge delivery.

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