Ihug memo reveals "new era" for company

An internal staff memo that appeared briefly on the Internet Group's Website shows the company overhauling its financial practices as it prepares for a public float. The head of the company's finance department outlines a 'new era' for the company and emphasises the need to 'demonstrate control of our assets and cashflow to external interested parties.'

An internal staff memo that appeared briefly on the Internet Group's Website shows the company overhauling its financial practices as it prepares for a public float.

In the memo, which is not considered particularly sensitive by Ihug management, Philip Wiese of the company's finance department outlines the company's passage into a "new era" of "accelerated growth, in both revenue and expenses [and] the accompanying demands from both internal and external sources …

"As part of the process of capital restructuring and Ihug's evolution into a valued and tradeable listed company we are required to open our books to external audit and must also follow more stringent reporting rules. For this reason we will need to instil new procedures and practices from time to time so that we can demonstrate control of our assets and cashflow to external interested parties."

Ihug director Nick Wood revealed the company's plans for a partial public float in this month's issue of Unlimited magazine.

Wood said between 20% and 30% of the company will be offered in May - along with an exit plan allowing investors to take gains in two years' time, when the company plans to list on a US exchange, probably the tech-stock specialist NASDAQ.

The investment plan is intended to allow the company to pursue a three-pronged strategy encompassing soon-to-launch IP telephony services and the StarNet TV digital TV service, which will include pay-per view movies.

"In two years we should have about 200,000 customers buying all three services - Internet, telephony and TV - so it'll be worthwhile going to a technology exchange in the US," said Wood. "I've already had people approaching me saying 'do it now', but it's way too early."

Wood told Unlimited the exact proportion of the company to be floated would depend on its valuation.

"We have people working on that at the moment, comparing it to what OzEmail sold for and various other transactions. We try not to factor in too much blue-sky - we've have some pretty good valuations done on just our cashflow."

As much as 5% of the company will go to its employees in trust at the time of the initial float.

"We figured a lot of those people have worked hard to get us where we are, so we should repay their efforts," said Wood. "It's not that cool for us to sit here and get rich. It's good to share it around - otherwise evil things happen to you!"

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