[00-4-14] Disney Mulling ISP Venture Down Under
By David Frith, Computer Daily News.
SYDNEY, AUSTRALIA,
14 Apr 2000, 6:15 AM CST
****Disney Mulling ISP Venture Down Under 04/14/00 SYDNEY, AUSTRALIA, 2000 APR 14 (NB) -- By David Frith, Computer Daily News. Sydney-based Internet service provider Eisa has rounded up three major partners and is talking with a fourth - a subsidiary of US-based Walt Disney Co. [NYSE: DIS] - in its initial funding bid to take over the OzEmail consumer ISP business.
However so far Eisa has come up about $101 million short of the $350 million it needs to complete the deal, the company revealed yesterday. It will now seek to raise the rest in private placements with overseas investors.
OzEmail, currently owned by MCI WorldCom [NASDAQ: WCOM] of the US, is Australia's largest Internet service provider with more than 300,000 subscribers. The investment and Internet sector have been waiting to hear how Eisa would fund the acquisition ever since the deal was announced on February 14.
In statements released to the Australian Stock exchange this week, Eisa confirmed deals with the Australia's ANZ Bank, the Sydney-based Fairfax media group's f2 online unit and the Melbourne-based Hastings Funds Management group, all of whom will take an unspecified amount of equity in the new venture in return for cash.
Hastings will pay $100 million in Australian currency for its shares; and Fairfax and the ANZ will contribute 40 million Australian dollars each: a total of $180 million, or about half the sum required.
Fairfax is also to supply content and manage a new Eisa-OzEmail portal in return for a fee; the ANZ will provide financial services both to the Eisa group and to Internet customers.
Eisa said it is also in talks with Walt Disney's Go Networks concerning distribution in Australia and New Zealand of "certain of Go Network's Internet properties".
It added: "These discussions include the possibility of an arrangement under which Eisa would issue common stock to Go Network. No definite agreement has yet been reached."
So far there does not appear to be any suggestion that Go Network would put in any money. Thus, if the $350 million asking price is correct - some reports have put the figure lower - Eisa still needs to raise around $170 million.
Eisa's ASX statement said the arrangements provide it with a "firm base to complete its capital raising program to fund the acquisition of OzEmail Internet." CEO Damien Brady reportedly told the Bloomberg news service that the $170 million would come from $250 million in planned placements with unnamed offshore institutions.
According to Bloomberg, Hastings will hold around 12 percent of the action, with the ANZ and Fairfax on about five per cent each. That leaves Eisa's shadowy management; Disney, if it comes in; and the unnamed offshore institutions to split 78 percent.
Eisa coyly noted its "vision is to become the leading integrated Internet-based communication group in the Asia Pacific region" -- a vision that could bring it into conflict with elements of the proposed new Telstra-CyberWorks alliance, also announced this week.
Said Damien Brady: "These strategic alliances will assist Eisa to position itself to become a clear leader in Australia, with a solid base for fast expansion into Asia."
Under a memorandum of understanding signed this week, Eisa and Fairfax's f2 online subsidiary will develop a content and e-commerce portal. It aims to be "the leading traffic and distribution portal in Australia and New Zealand," a statement says.
To do that it would have to displace current No 1 portal, Ninemsn, jointly owned by Microsoft and media mogul Kerry Packer's Publishing and Broadcasting group.
F2 will manage the new portal for a fee and will contribute its own properties, many of which compete directly with Ninemsn sites. They include Tradingroom (investing and finance); Mycareer (jobs); Citysearch (dining and entertainment guide); Drive.com (cars for sale); Domain (property); Sold.com (auctions); and shoptoday (shopping).
The new portal company will have rights to the "complete aggregated content" offering of f2. Fairfax CEO Fred Hilmer promised the OzEmail-f2 relationship would develop "new revenue streams through viewership and transactions.
Reported by Newsbytes News Network, newsbytes.com . 06:15 CST
(20000414/WIRES ONLINE, BUSINESS, ASIA/DISNEY/PHOTO)
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