Heroes, villains, intrigue and a plot that would make Jeffrey Archer jealous Once it was set to rival Yellow Pages, now it's a financial disaster. Heather Tomlinson tells the weird and wonderful story of Scoot.com
Independent on Sunday - United Kingdom, Jul 22, 2001
BY HEATHER TOMLINSON
At first glance, the story of Scoot.com contains no surprises for anyone familiar with internet businesses. Inflated share prices, massive losses, changing business models and a cash crunch all drive the plot. But a host of colourful characters, links with a forthcoming fraud trial and mudslinging with rivals have combined to make this one of the most intriguing dot-com tales of all.
The central character is Robert Bonnier, who was chief executive until he resigned last month for "personal reasons". The Dutchman, now in his early thirties, made his debut on the stock market when he was just 14 years old.
He was once hailed as one of the leading entrepreneurs of the internet generation, and had the Porsche and the pounds 2m house to prove it. Scoot was a budding online directory service, and the future looked bright. But now the company is searching for the means to stay afloat and has until the end of September to raise the cash.
While this is no longer Mr Bonnier's problem, he still faces other challenges. Earlier this month, lawyers representing Andrew Regan, a defendant in a court case being brought by the Serious Fraud Office, met with investigators at the Department of Trade and Industry. The topic of discussion was a former chairman of Scoot, Ronald Zimet. He resigned in 1997 after the SFO started looking into payments between Mr Regan's company, Hobson, and directors of the Co-operative Wholesale Society. He is now a key witness in the trial, which starts in September, and may give evidence via a video link from Israel.
Mr Regan's lawyers met with the DTI to discuss a large dossier that concerns the "credibility" of the witness, and is thought to contain information on both former executives.
Scoot has had a colourful history. Revenues from the core business, which provides a telephone and online directories service, have seesawed since the company entered the stock market in 1996. After dropping nearly a fifth in 1999 to pounds 15.4m, they fell further in 2000 - the 15 months to the end of the year showed revenues of pounds 11.5m. The company was boosted only by Loot, a free ads newspaper and website, acquired in 2000. And subscriber numbers have seen similar shifts - from around 32,000 at the start of 1999 to 15,500 later on in the year, to the current value of around 18,000.
The company says this is all to do with changing business models - pricing structures have been altered to appeal to large, multi-site businesses. But the changing numbers prompted one anonymous mischief-maker to send a dossier around the City in January last year with a host of allegations about the directories service. Subscriber numbers were being inflated, it said; it also contained a survey, allegedly of Scoot's customers, in which 70 per cent complained they were unhappy with the service. Both slurs were rubbished by the company. In addition, the dossier claimed that Scoot salesmen had used "false" and "malicious" statements when trying to get companies to subscribe to the service - to the effect that BT's rival service, Talking Pages, was about to fold or had been bought by Scoot. BT is thought to have issued a writ but the matter was settled out of court. Scoot cried foul and called in private investigators to discover the dossier's source.
The allegations didn't stop the shares rocketing to 350p in March last year, from under 50p the year before. Many share movements were caused by reports of bid talks - Richard Li's Pacific Century CyberWorks and Vivendi Universal, the French media giant, were rumoured to be bidding for the company, although this was later denied. Market gossip spoke of suspicious share sales around the time of a supposed Vivendi approach.
But this was not a new phenomenon for Scoot or its executives. The DTI is understood to have looked into share trades by Mr Bonnier, while he was at Swiss Bank Corporation. One of the companies was said to be Mr Regan's Hobson. And investigators are also said to have looked at trading by Mr Bonnier and Mr Zimet in the shares of Scoot itself.
Even the company's beginnings were controversial. In 1996, when it was known as Freepages, it obtained a stock market listing by reversing into a tiny builders' merchant called, rather ominously, Blagg. Suspicious share trading ahead of the activity led to the first DTI investigation, although no one was charged with any offence. Separately, Owen Oysten, the former Blackpool FC chairman jailed for raping a 16-year-old girl, became an investor while awaiting trial.
With such an unusual history, it is not surprising the DTI wants to entertain Mr Regan's lawyers to try to glean more information on the company. But Scoot has hit back against all allegations, and claimed a "dirty tricks" campaign, orchestrated by Mr Regan. And Mr Bonnier and Mr Zimet have denied any wrongdoing, although it was not possible to contact them last week for further comment. Followers of the Scoot story will have to wait some time before they can decide who are the heroes and who are the villains.
Such questions are not uppermost in the minds of long-suffering shareholders. Aside from the company's worrying cash position, they could be sitting on massive losses. If an investor had put pounds 1,000 into Scoot in March, he or she would now have only pounds 5 left. The company is currently valued at under pounds 20m, some distance from arch rival Yell, which includes the Yellow Pages business, sold for pounds 2bn in May.
Now Scoot has new management, led by John Molyneux, who is heading an attempt to save the company and then put it on the slow road to recovery. "The game isn't over yet," he told The Independent on Sunday. He is to refocus the company on the UK and is looking at selling or securitising revenues from Loot.
"Expect slow, sure-footed moves and measures and a very pragmatic approach," he said. After Scoot's turbulent history, it's a line investors will be glad to hear.
Fact file
Many central characters in the Scoot tale came from the corporate finance department of Swiss Bank Corporation - now integrated with UBS Warburg.
Robert Bonnier
Mr Bonnier joined SBC as a graduate trainee and later worked at the corporate finance department. After four years he left to start up Freepages, the precursor to Scoot, where he became CEO in 1996.
Ronald Dorjee
Scoot's former finance director also worked at SBC's corporate finance department with Mr Bonnier. Although he has resigned from Scoot as finance director he is still working there, pending the appointment of a replacement.
Andrew Regan
Mr Regan faces theft charges relating to alleged payments made by his company, Hobson, in 1995, to secure a contract. At the time Hobson was advised by SBC. Ronald Zimet, a former chairman of Scoot, will be a key witness in the trial.
Chris Akers
Mr Akers, who orchestrated Scoot's entry on to the Stock Exchange through a reverse takeover of Blagg, was a media analyst at SBC until 1995. He has carved a career out of introducing companies, such as Leeds United FC, to the stock market through reverse takeovers. He also brought the failed Eurotelecom Communications to the market.
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