After a tough a year and significant portfolio write-downs, listed technology investor NewMedia SPARK is reviewing its future with talks of a possible takeover. Quoted stockbroker Collins Stewart is rumoured to be in the running although both firms declined to comment.
Joel Plasco of NewMedia SPARK said: “Following our year-end announcement, it is no secret that we have been looking for alternative options and if someone approaches us, we will consider it carefully. Despite the fact that we have cash, market conditions are difficult and we have been forced to look at alternative plans.”
NewMedia SPARK has confirmed it is currently considering a possible sale of the company and discussions are taking place. However, talks are still at an early stage and may or may not lead to an offer being made for the company. The listed vehicle warned that an offer, if made, would be below the last stated net asset value of the company of 13 pence per share. At the height of its existence in the Internet boom, the firm peaked at around 180 pence per share.
Following disappointing results for the year ending March 31 announced in June and substantial portfolio write downs, NewMedia SPARK has been reviewing its strategy for some time. At the time of the results, Michael Whitaker chief executive officer, stated: “It is clear that in present market conditions SPARK must adjust its course and that radical action is required to maximise shareholder value. We are therefore instituting further very substantial cost cuts, closely controlling new expenditure and exploring ways of returning surplus cash to shareholders. SPARK’s board is also considering other strategic and financial options.”
The firm has reduced staff levels by over 50 per cent to around 16 employees and has been implementing substantial reductions in office and other central overhead costs. Remaining senior staff, including executive directors have agreed to take salary cuts of up to 30 per cent, while Whitaker draws no salary.
It is not all negative. Cash balances have been rising since September 30, at which time the firm reported balances of GBP35 million as a result of portfolio realisations and tight control on new expenditure levels. While the group has made substantial portfolio write-downs, a number of NewMedia SPARK’s portfolio companies continue to make good progress. Fourteen portfolio companies attracted third party investment in the year and six companies were sold. The two largest investments in the portfolio are the 11.36 per cent holding in Tullett & Tokyo Liberty with a book value of GBP7.3 million and a 38.46 per cent holding in Synaptics, which has a book value of GBP2.9 million.