Global-e: the small print

By ROD ORAM

American backers of Global-e Investments, the e-commerce venture launched in Auckland on Tuesday, are relying on bond holders to put up most of the money for the project while the backers stand to reap the lion's share of any rewards.

Global-e said on Tuesday that it hoped to raise $US1 billion ($2.05 billion) by selling bonds to New Zealand and foreign investors.

After paying out prize draw money to investors and paying back the bonds after 20 years, the company would have some $US275 million left over to build Global-e into a worldwide e-commerce powerhouse.

In presentations to Auckland financial advisers in recent months, Global-e said it hoped the company could be worth billions of dollars once it had developed its e-commerce capability.

But bond holders will end up owning only a small stake in the company even if they exercised all the options attached to the bonds.

Who would own the rest of such a valuable company came to light yesterday in the Global-e prospectus.

The Herald had asked Global-e for a list of shareholders and a copy of the prospectus at Tuesday's launch but the company said copies were not yet available.

However, a copy of the prospectus sent by the company yesterday shows that a Christchurch-registered company, MMC Management Holdings Ltd, owns 94.7 per cent of the issued ordinary shares of Global-e.

Of the 13 shareholders of Holdings, 11 are Americans and two are New Zealanders.

During the financial period ended last July, Global-e (then called MMC Management Ltd), allocated 26.6 million shares to Holdings at US0.3c each. But the latest company accounts, for the period to last November, show that Holdings had yet to pay for the shares.

Last Friday, two working days before Global-e's launch, the share structure was changed dramatically. Each ordinary share was divided into 100 new shares which left Holdings with 2.52 billion ordinary shares at a total cost of less than $US80,000, according to the prospectus. In total the company has 2.66 billion ordinary shares.

Philip Markwick, chief operating officer of Global-e, told the Herald yesterday that the original investors had "put in another $5.5 million" since November but he did not have to hand details of any impact on the shareholdings.

Mr Markwick said neither he nor Damian Archbold, Global-e's chief executive, would be available for further comment last night. Mr Archbold is the US architect of Global-e and one of two directors of Holdings and a major shareholder in it.

Asked by the Business Herald at Tuesday's launch whether Global-e's shareholders were getting a "free-ride" on the $US275 million of bond holder money invested in the company, Mr Archbold replied that bondholders had the opportunity through their options to become shareholders.

But the prospectus shows that of a total of 2.66 billion ordinary shares, bondholders would have a maximum of only 300 million, limiting their share in the company's value.