Plus SMS reveals blunders

Troubled text-message marketer Plus SMS Holdings said yesterday it had mistakenly negotiated unusable fixed-line instead of mobile contracts.

Plus SMS plans to sell single mobile codes for companies to use in global text-message campaigns.

The company said a strategic review had revealed contracts previously negotiated with various telecom operators were mainly for fixed-line numbers and therefore unsuitable.

The company also said former chairman Jim Bracknell had been a concern.

Bracknell and founder Garry Donoghue resigned this month on the same day Plus SMS admitted issuing incorrect statements to investors.

New chairman George Brooks said the review hadn't anticipated finding contracts for fixed numbers.

"From fixed lines you can't send a text message so that was quite a surprise," Brooks said. "I would suggest that the technical experience the company needed to actually acquire the proper type of number didn't exist in the company at that time."

Renegotiation of contracts was a key priority, he said.

"Naturally it is of serious concern to find we are holding fixed-line contracts which we cannot commercialise in their present form."

The feasibility of using international vanity short codes - for example "rugby" - had also been investigated.

Codes with less than seven digits worked on a national basis but current technology meant international codes needed to be at least seven digits long.

Some of the codes Plus SMS had access to were less than seven digits and therefore no good for the firm's cross-border proposal.

An inquiry by the Securities Commission was launched after this month's revelation of false statements and a subsequent share-price collapse which more than halved the value of the company.

However, Plus SMS shares closed up 2c yesterday at 14c.

Macquarie Equities investment director Arthur Lim said investors were just taking a punt.

"What we find is a lot of people who buy the stock are buying on hearsay without even understanding what the company does," Lim said.

At the time of Bracknell's resignation Plus SMS said he had left to pursue other interests.

Yesterday, at the request of the Securities Commission, the company released a copy of the settlement deal made with Bracknell when the company had "concerns about [his] conduct and performance".

Brooks did not provide details on the concerns, saying they came under the commission's investigation.

Bracknell offered no comment.

The agreements with Bracknell and Donoghue had enabled the installation of a robust governance structure allowing efforts to be devoted to securing the future, the company said.

"In a nutshell, we have a very strong business proposition, a new management team committed to rebuilding the company, the support of our cornerstone shareholder Hewon Capital and a comprehensive rebuild proposal," Brooks said.

The company was looking to earn revenue in the July to September quarter next year but would burn cash at the rate of $900,000 a month while it was being rebuilt, Brooks said.

The company's cash reserves would last until February.

The board was reviewing the proposal put forward by Jersey-based Hewon, which included listing on the London Stock Exchange AIM or similar international market.

Plus SMS said Hewon would underwrite the raising of up to $6 million of new capital in conjunction with the proposed listing.