Thin Technologies and mBox have very similar histories but their future prospects could not be more different. Mark Beyer reports on two intriguing takeover battles.
BACK in 2000 Thin Technologies and mBox were up-and-coming tech floats chaired by Chris Singleton, the marketing and technology consultant who formed B Digital.
The two companies slowly but surely lost a lot of money and foundered, yet currently they find themselves at the centre of fascinating takeovers.
Thin Technologies has been cleaned up by South Perth firm Cunningham Securities and looks like it will end up in the hands of ‘blue blood’ establishment figures from Brisbane, who are using it as the vehicle for a major investment company.
mBox, by contrast, looks as though it could end up in the hands of mining entrepreneurs from Adelaide.
The most intriguing aspect of the mBox takeover battle, which was sprung on the market unexpectedly last week, is the tangled interconnections between the players.
Adelaide accountant Guiseppe Mercorella’s MZF Pty Ltd (which holds 16.6 per cent of mBox) has requisitioned a shareholders meeting to oust Perth-based directors Paul Price, a partner of law firm Price Sierakowski, and John Gillon, the principal of law firm Gillon & Associates.
MZF has nominated Domenic Zappia (who holds 19.9 per cent of mBox) and Carmine Barrone, both of Adelaide, as new directors.
If successful, they would join a third Adelaide-based director, Nick Formichella, and win control over mBox’s $2.6 million in cash reserves.
Messrs Mercorella, Formichella and Barone are also on the board of oil and gas explorer Lion Energy (formerly Kalrez Energy), whose fourth director is Perth mining investor Eddie Smith.
The plot thickens.
Messrs Smith and Gillon are co-directors (with Mr Singleton and Doug Jendry) of Impress Ventures, which has a 5 per cent stake in mBox.
Mr Smith was in the news last month when he tried to force a board spill at Strata Mining, chaired by St Barbara boss Stephen Miller.
Mr Smith lost that battle, and his cause was not helped when Mr Gillon (his co-director at Impress) voted against the spill motion.
Now we have a situation where Mr Smith’s co-directors at Lion Energy are seeking to oust Mr Gillon (and Mr Price) from mBox.
Mr Smith said he had “absolutely nothing” to do with the mBox challenge.
“It doesn’t interest me,” he said. “Certainly I’m not in the game of tit for tat.”
The challengers are almost assured of success since they have a collective 37 per cent shareholding in mBox.
Mr Mercorella said he knew Mr Zappia well, but insisted they were not acting as a bloc.
“I’m aware of the legal requirements of association. We’re not associated. It’s as simple as that,” he said.
Adding to the intrigue is the fact that Mr Zappia bought his 11.3 million shares off-market at 6.1 cents, even though about 10 million shares were on offer at the time at an average price of 4.5 cents.
The takeover battle for mBox erupted on October 8, just six days after Mr Singleton resigned as chairman.
“It was totally coincidental,” said Mr Singleton, who told WA Business News he could not understand why a meeting of mBox shareholders was requisitioned, since Messrs Gillon and Price were due to stand for re-election at next month’s AGM anyway.
“A change of directors was always on the cards, I don’t know why they’ve done it this way,” he said.
Mr Mercorella has a simple explanation.
“Statements have been made to me previously as to what would happen, certain courses of action, that haven’t happened. I’m leaving nothing to chance,” Mr Mercorella said.
Mr Mercorella also claims to be a fan of mBox’s loss making ‘unified messaging’ technology.
“I like the product; it’s a question of whether it can be turned around,” he said.
“If it can’t be turned around, the business would be sold.”
The current directors of mBox highlighted the challenge ahead.
“Our market research shows that there is still too much confusion associated with unified messaging,” the 2003 annual report says.
There is less confusion surrounding oil and gas drilling in South Australia’s Cooper Basin, which has become the major focus of Impress Ventures and Lion Energy.
Both companies have acquired exploration interests in the Cooper Basin and plan to focus on that activity.
In contrast to mBox, Thin Technologies is making a smooth transition to a much bigger future.
Its recently appointed chairman is Martin Kriewaldt, former deputy chairman of Suncorp Metway, who is due to be joined by Peter Polson, former head of Colonial Funds Management, John Thame, former managing director of Advance Bank, and Keith De Lacey, a former Queensland Treasurer.
The company plans to raise up to $30 million over the next few weeks and change its name to Acuity Investment Management.
Cunningham Securities principal Tony Cunningham led the ‘clean up’ of Thin. He said the new directors were keen to acquire a shell company in order to expedite the implementation of their business plan.
“They didn’t want to wait around and do a float,” Mr Cunningham said.
“They looked at 19 shells and Thin was the cleanest shell.”
The clean up of the company included outsourcing its core IT system – a point of sale retail management system – to LogicaCMG.
Mr Cunningham estimates the value of Thin has risen more than four-fold since his company, Buyshop Limited, injected $350,000 in May (at 1 cent per share) to acquire a one third shareholding.
Thin recently raised money at 3 cents per share and the planned $20 million capital raising is at four cents per share.
