Breathing space for IT Capital

By PETER GRIFFIN IT writer

IT Capital has won shareholder approval for a rescue package that may save it from liquidation, but management say its future is still far from certain.

At a tense shareholders' meeting at Auckland's Hilton Hotel, Shareholders' Association chairman Bruce Sheppard squared off against IT Capital heads Maurice Bryham and David McKee Wright over a plan to refinance the struggling company.

Sheppard picked holes in IT Capital's plan to raise $3.7 million and issue 137.5 million shares at 4c each to Bryham and McKee Wright, who are bringing their interests in three start-ups worth $5.5 million into the IT Capital fold.

Despite his opposition, Sheppard did not have the numbers to overturn any of the contentious resolutions presented to shareholders.

But chief executive McKee Wright said Sheppard's opposition through the media to the package, and his criticism of an independent appraisal of IT Capital carried out by Grant Samuel & Associates, had spooked potential investors and put the rescue package in jeopardy.

"The resolutions have given us some flexibility. But at the moment [potential investors] say they're extremely nervous."

While Bryham and McKee Wright will commit $1.2 million to IT Capital and current investor Jay Snider will inject $500,000 in return for 12.5 million shares, other investors have yet to commit to the balance of $2 million.

"Sheppard wanted the company to be liquidated and there's still a good chance he will win," said a dejected McKee Wright.

Sheppard took issue with the Grant Samuel appraisal, which valued IT Capital at 4c a share. He said a valuation of 6c to 7c was more accurate, and believed Bryham and McKee Wright should not be issued more than 40 million shares for their investments.

He berated IT Capital's board for not informing Grant Samuel of an offer received from a Vancouver investor for tech company Deep Video Imaging, in which IT Capital has a 42 per cent stake.

IT Capital chairman John Robertson said the offer was irrelevant and had no fixed value attached to it.

Sheppard succeeded in getting several amendments to resolutions from the floor, something rarely seen at shareholder meetings.

He said the minor amendments would give IT Capital's board a chance to review the package in the next few days before going ahead.

"If the announcement to the exchange in due course is that these boys have been given 137.5 million shares, then the board is weak and [Bryham and McKee Wright] have put their integrity 100 per cent on the line."

Small shareholders, critical of management mistakes by IT Capital, demanded changes.

"We've got to have more disclosure because I'm shocked at some of the things that have happened," said one shareholder.

McKee Wright said IT Capital had only enough cash to run the business for four weeks - about $135,000 - and that if the package was not accepted, there was no "plan B" for the company.