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Ideal doesn’t match the reality for Imago

IF ever a company adopted a name that had interesting business connotations, it was Imago.

The multimedia firm, originally incorporated in January 1995 as the more-ordinarily named Westmedia Ltd, changed its name when it submitted a proposal to the Federal Government for funding under the Cooperative Multimedia Centre (CMC) program.

Who knows what its original owners meant by the name which means a sexually mature insect or an idealised image of a human adult, if you go by the dictionary.

An informal network of CMCs traditionally meets several time a year. However, the absence of Imago representation at these get-togethers has fuelled speculation about the group’s future.

Imago was one of six Cooperative Multimedia Centres established in each mainland capital city in 1995-96, each of which has been supported until the end of this year by $1.375 million in annual Federal funding. Each CMC was also expected to act as a business and draw income from the provision of products and services.

As WA Business News reported last week, Imago has hired a business consultant to handle the sale or division of the company. When asked about this matter, neither Imago chairman James Milner-Yates nor the consultant, Andrew Parkinson, was willing to give any information about possible transactions, other than to confirm some sort of sales process had begun.

Since then, WA Business News has become aware that Imago may have been in discussions with at least one other CMC to discuss a deal. The company has prepared an information memorandum and is presenting this to parties interested in buying the company.

But while the company’s representatives are saying nothing, various players in the local IT industry and the Australian multimedia sector have said they would not be surprised if Imago’s directors were seeking to sell the company. They say it was almost inevitable that the company’s future would be uncertain if its Federal funding of $1.375 million per year was not continued.

A spokeswoman for the Department of Education, Science and Training, which was responsible for the CMC program, confirmed to WA Business News that Federal funding for the program would conclude at the end of this year. The program had run its course and the CMCs were now expected to be self-sufficient.

When WA Business News contacted other CMCs around Australia, their representatives said the respective companies were independently financially strong and although the Federal funding had been helpful, it was no longer needed.

They also indicated that no Imago director had represented the company at the most recent meetings of the Australian CMC Network. This was understandable, however, given the meetings were held in the eastern States and the time taken to travel to and from Perth could be inconvenient.

The network is an informal and non-compulsory forum for each of the CMCs and meets three or four times each year.

Imago was primarily set up and funded by total contributions of more than $4 million from Edith Cowan, Murdoch and Curtin Universities, which between them held 491,627 ‘A-class’ shares, and a further $816,000 from three technology firms, which each owned 100 ‘B-class’ shares.

In February 1997 Imago released a prospectus offering ‘C’ and D’ class shares to multimedia firms and members of the arts community (individuals and institutions) in WA only.

In the prospectus, the company itself described its semi-public offer as “unusual”. Investors were offered “the opportunity to express your commitment to the multimedia industry, at the same time joining an exclusive network of like-minded professionals”.

The prospectus continued: “At a philosophical level, you are not only taking a share in an exciting new company, you are actually investing in your own success, your own future, and ultimate of course, yourself”.

An investor could buy only one $1 share in Imago. Further, that $1 share was offered at a premium of $99, meaning new investors were required to give the company $100 for one share.

Imago’s role was to be an agent through which companies and people in the multimedia industry would come to work together to develop the industry in Perth.

As a non-profit entity, Imago was not able to pay dividends to its shareholders, nor return capital to them upon the winding-up of the company. If the company were to be wound up, Imago’s agreement with the Federal Government meant that any of the company’s property or money that exceeded its liabilities would have to “be paid or transferred to some other institution or institutions having objects similar to the activities of the company”.

The prospectus stated that a vote of 60 per cent of its directors was required to approve, among other things, any material change in the company’s business or in policy regarding the operation of the company’s business. In contrast, any sale of the company’s main undertaking or any disposal of its assets would require the approval of 75 per cent of shareholders.

ASIC records show that since Imago was incorporated in 1995, it has had 47 directors including those currently on the company’s board.

According to the ASIC, Imago has not yet lodged a financial return for the 2000-01 financial year – a responsibility all Australian companies with a “limited” status are required to meet – even though this was required to be done by January this year. ASIC records confirm the company has lodged financial returns for the years before 2001.

Mr Milner-Yates said shareholders had been given copies of the company’s 2001 financial returns.

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