Text company gets boost after $4m loss

The global texting company is to set up an advisory board to help to accelerate its mobile plans

Plus SMS Holdings has received a vote of confidence from a Jersey-based investment firm which is committing $5 million up front, and ultimately up to $40 million, to the global text-messaging company.

News of the investment came as Plus SMS reported its first full-year earnings as a listed company - a $4.5 million loss.

The NZX-listed, Isle of Man-based company enables companies to run global text message campaigns and competitions using single codes.

So far Plus SMS has acquired more than 1000 codes including "sport", "rugby" and "football".

Together with selling up to 20 per cent of the company to Jersey-based investment company Hewon Capital, Plus SMS plans to set up a a high-powered advisory board to accelerate its text message business plan.

"We need to find some high-quality consultants who are familiar with the telecoms business who understand how to go out and acquire access to number ranges and negotiate," said Plus SMS chairman Jim Bracknell.

He said the money was not needed to achieve the business plan, but would accelerate progress.

Hewon will invest $5 million up front - a subscription of 10 million shares at an issue price of 50c a share. A further 70 million warrants issued to Hewon to subscribe for shares at an exercise price of 50c each, with exercise periods ranging from 10 to 20 months, could raise $35 million more.

The first tranche of the 70 million warrants would be triggered by Plus SMS listing on the London Stock Exchange's AIM market.

If all the warrants are exercised then Plus SMS will have raised $40 million and Hewon taken about a 19.8 per cent stake in the company.

In what Bracknell described as a package deal with the new investment, a group of international media and telecommunications entrepreneurs, executives and investors would form a Plus SMS advisory board.

This board would include former Telepiu Italia chief executive Rob Hersov, former chief executive of Telecom Italia Mobile Marco de Benedetti, and former chairman and CEO of TI Group Sir Christopher Lewinton.

"More than the money, the attraction to me for doing the deal with Hewon was the quality of people that they were able to bring in to give us assistance and connections and networking," Bracknell said.

Hersov would chair the advisory board.

"Our immediate focus will be to ensure the group becomes fully operational as quickly as possible so we can harness its enormous potential to exploit the burgeoning SMS markets around the globe," Hersov said.

A meeting of Plus SMS shareholders to approve the deal is expected before the end of June.

Plus SMS, which joined the NZX Alternative market last July via a back-door listing using the shell of failed retailer RetailX, posted a loss for the year to March 31 of $4.5 million.

"We've said all along during this fiscal year we should become cashflow positive, and I think we will still do that," Bracknell said.

The advisory board will also work closely with Plus SMS to identify and hire a chief executive and management team.

In March, Plus SMS concluded an agreement with Hong Kong-based CITIC 1616 making its services available throughout Greater China and other parts of Asia.

Last month Singapore-based International Sports Television, which markets various short codes for Plus SMS, signed the company's first two commercial deals, each of which is expected to exceed a value of A$2.5 million.

Plus SMS Holdings
Year ending March 31 

* Revenue $6000
* Loss $4,489,000
* Basic eps ($2.91)