Join Date: May 2001
Location: Somewhere over the rainbow
OzEmail sellers may be buyers
High-profile dot com millionaires Sean Howard, Trevor Kennedy and Malcolm Turnbull are considering buying back Internet company OzEmail from its beleaguered American parent, WorldCom.
Just three years after selling it to the telecommunications giant for $520 million cash, the trio hope to secure OzEmail for a fraction of the sale price.
With the global telecom industry in meltdown, market estimates for OzEmail range from $50 million to $250 million.
Mr Howard famously built OzEmail out of an obscure email business bought for next to nothing from Kerry Packer in 1994.
With the backing of Mr Kennedy and Mr Turnbull, he built it into one of Australia's top Internet service providers before selling it to WorldCom at the peak of the technology boom.
At that point, in early 1999, it had about 300,000 subscribers and was forecasting revenue of about $200 million for the year 2000.
Mr Howard, who earned $118 million from the deal, did not deny he might buy it back if WorldCom were forced into a fire sale.
"I can't make any comment," he said yesterday, but confirmed he wasn't out of the circuit.
Mr Kennedy who, like Mr Turnbull, made about $59 million from the sale, was more forthcoming. "It is clearly a company we understand and like. At the right price it would be of interest," he said.
What the right price might be is still unknown.
"The company has changed a lot since we sold it," Mr Kennedy said.
"We haven't done any due diligence and we don't know how profitable it is."
He and his partners had seriously looked at acquiring the company about six months ago, he said.
Since the news of WorldCom's problems broke, they had talked again "informally".
But they had not spoken further since WorldCom announced on Wednesday that it had improperly accounted for more than $US3.8 billion ($6.7 billion) in expenses.
OzEmail is ranked No2 behind Telstra, with 600,000 subscribers.
Since selling OzEmail, all three investors have remained involved in technology start-ups, primarily through the listed investment vehicle FTR Holdings.
If they do end up negotiating with WorldCom, at least they know the US group's new chief executive, John Sidgmore.
As the former head of WorldCom's Internet arm, UUnet, Mr Sidgmore negotiated the purchase of OzEmail.
According to US reports, there is a growing expectation WorldCom will not survive the fallout from its accounting malpractice.
The company still says it hopes to avoid bankruptcy, but it has lost operational financing and a criminal fraud investigation looks likely.
The New York Times said that because WorldCom had violated the terms of a financing arrangement negotiated just last month, it no longer would be able to raise money against payments from its customers.
It now will have to wait for customers to pay their bills, which could take up to three months.
Even before the latest disclosure, WorldCom had been seeking to almost double its outstanding loans.
A committee of nine banks with exposure to WorldCom has been formed to consider future lending.
Mr Sidgmore, former chief executive Bernard J. Ebbers and sacked financial officer Scott Sullivan have been subpoenaed for a hearing on July 8.
You know, somebody actually complimented me on my driving today. They left a little note on the windscreen. It said, 'Parking Fine.'So that was nice.