Stake in Radionet for Jump Capital

By GEOFF SENESCALL

Hospitality company Wilson Neill is carving off its fledgling technology business Radionet through a multimillion-dollar linkup with Jump Capital, whose shareholders include Sir Michael Fay and David Richwhite.

After two months of negotiations and much speculation, technology investor Jump Capital has agreed to take a 28 per cent shareholding in Radionet in a deal said to be worth more than $20 million.

The purchase includes a $10 million cash payment which will be used to roll out Radionet's high-speed wireless communications network in New Zealand and possibly Australia.

Wilson Neill director Paul Hyslop, who negotiated the deal, believes Jump will bring a further $10 million of value through its strategic alliances and partnerships, including an agreement with Ericsson Communications.

"Jump has also written a new 10-year business plan for Radionet with the assistance of Deutsche Bank, which should see Radionet grow to a company with a market capitalisation of $300 million to $500 million," he said.

The deal with Jump puts in doubt a planned $24 million tie-up with the Australian listed shell Mount Conqueror Minerals, which was to be the vehicle for a rollout of Radionet's network across the Tasman.

Mr Hyslop said the agreement was not dead. But he acknowledged Jump's involvement had caused Wilson Neill to reassess its options in Australia.

The sale to Jump - whose principals are former Fay Richwhite executive Leigh Davis, former Montana chief executive Bryan Mogridge and Mike Youngman - comes six months after Wilson Neill bought Radionet through the issue of shares worth about $2.5 million. A further $2 million has been invested.

The investment in Radionet has helped drive the Wilson Neill price from a low of 1c this year to a high of 19c. The shares, which are listed on the second board, closed at 14c on Friday, giving the company a market capitalisation of $65 million.

The value of Radionet became apparent after one of its competitors, Walker Wireless, attracted a who's who of business in a $20 million capital raising in July this year. This valued Walker Wireless at $50 million.

Both, along with eSavoy investment IPfinity and Clear Communications, are competing for a share of the wireless internet market.

The restructuring of Wilson Neill, expected to be completed by November, will see Radionet become a standalone business with its own listing on the second board. Wilson Neill will retain a 12 per cent shareholding in Radionet. Its shareholders will collectively be given the balance of the shares in Radionet totalling 60 per cent.

Shareholders will retain their existing exposure to Wilson Neill, which will also remain listed on the second board, focusing on its hospitality businesses, including Cobb & Co and the Parnell restaurant Iguacu.

Radionet plans a full listing within 12 months.

Wilson Neill's rejuvenation comes about six years after the former market darling Wilson Neill Ltd - the third largest company in New Zealand in its heyday - was placed in liquidation.

The existing Wilson Neill rose out of those ashes with $4000 worth of computer equipment and no cash for its 1200 shareholders.

Today Wilson Neill has about 8500 shareholders.

"It has been a hard slog," said Mr Hyslop. "Former Wilson Neill boss Colin Herbert, who lost $60 million personally in the collapse of the original Wilson Neill Ltd, has been a great mentor to me and the board. He has been instrumental in helping us re-establish our existing business."