Domainz sale: No conflict of interest says InternetNZ

InternetNZ is moving to address concerns about a conflict of interest in its sale of the former registry company Domainz.

InternetNZ is moving to address concerns about a conflict of interest in its sale of the former registry company Domainz.

Domainz, currently operating as the stabilising registrar in the opening months of the new shared registry system (SRS), has been put up for sale following the decision by InternetNZ not to operate a commercial registrar.

The chair of the Domainz board, Bob Gray and its CEO, Derek Locke, have joined forces with a number of staff members to propose a management buyout of Domainz.

However, former InternetNZ treasurer and longtime observer of the .nz space Steven Heath is concerned by the conflict of interest inherent in having the chair and CEO maintaining their roles while the sale process is undertaken.

"Both ... were on the original Domainz taskforce and part of the agreement was that you gave verbal assurances that you weren't interested in purchasing it."

Both Gray and Locke have been on the InternetNZ committee looking into the possible sale of Domainz, though both have resigned following the disclosure of their interest.

Gray says he and Locke stepped down from the committee reviewing Domainz's future after the first meeting.

"After that the staff told me [of their intention to bid for Domainz] and I declared my interest and stood down from the taskforce, and we set up a sub-committee to deal with all aspects of the sale."

Heath says Domainz is a going concern, with money in the bank and the potential to carry between 30,000 and 50,000 domain names once the stabilising registrar contract has concluded.

"At worst case you could buy it and immediately shut it down, sell off the names and pay the liquidation costs and come out ahead. No matter what, it's still worth that."

InternetNZ executive director Peter Macaulay says while that's possible, it's already one of the options that InternetNZ has discussed and dismissed.

"Ideally we'd like to sell to a New Zealand company that wants to add value to the existing structure."

Macaulay dismisses concerns about conflict of interest.

"They quite properly have withdrawn from [the taskforce] and have been replaced on the team. We're also bringing in an external advisor."

The advisor, who should be chosen by the end of the week, will bring experience on these kinds of issues, says Macaulay.

"We're looking at several people and we've got a final briefing this week. The aim is to have someone who is competent to get us a good value and still understands the nature of our responsibility -- which goes beyond just getting a good price."

Macaulay says several parties have already expressed an interest in Domainz in addition to the management buyout proposal.

"The advantage they do have over other bidders is inside knowledge, but the fact that they've got that knowledge and are interested in buying is an indication to others that this isn't a bad business. It works both ways. An MBO encourages external buyers."

Any sale will have to be considered by the incoming council at the next InternetNZ annual general meeting in June, which may impact on the speed of the sale. Macaulay says the sale has to be completed by the end of September when Domainz's contract as stabilising registrar expires.

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