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To: Vendit™ who wrote (24256)	6/28/1999 7:19:00 AM
From: Glenn D. Rudolph	Respond to of 41369

FOCUS-Dixons to sell a fifth of Freeserve in float (Rewrites with further details of flotation, Dixons considering change in capital structure para 11-12) By Richard Meares LONDON, June 28 (Reuters) - Retailer Dixons Group Plc <DXNS.L> fired the starting gun on Monday for Britain's biggest Internet-linked share issue, saying it was selling off a fifth of its free-access provider, Freeserve. Just nine months after its inception, Dixons said it would float 18.25 percent of the rapidly growing subsidiary on the London Stock Exchange and Nasdaq and sell a further 1.75 percent to telecommunications company, Energis Plc <EGS.L>. It said that through its Internet subsidiary Planet Online, Energis, which provides the phone lines for Freeserve, would buy a further two percent of the company over the next four years. The issue will comprise new shares in Freeserve, together with a sale of Freeserve shares by Dixons. Some shares are being reserved for members of the public, who must register via the Internet only by July 9. The minimum application is 250 pounds and preference will be given to anyone with a Freeserve account. "The flotation of Freeserve is an important milestone in our strategy to become the UK's home on the Internet," said John Pluthero, Chief Executive of Freeserve. Dixons gave no indication of the price at which shares would be offered, leaving open the burning question of just how much the Internet subsidiary is worth. Industry sources have estimated Freeserve' total value at anywhere between 1.3 billion pounds ($2.06 billion) and twice that much. The venture has gathered 1.25 million users in nine months. Freeserve has become Britain's highest-profile Internet success story, helping double the share price of its parent Dixons, the country's largest electrical retailer, as a result. Dixons also said it was considering a corporate reorganisation to give it more flexibility and a capital structure more appropriate to its needs. The firm's reference to "capital structure" prompted speculation that this might include a return of cash to shareholders. Retail analysts estimated the group probably had around 300 million pounds net cash as at the end of April. Dixons shares rose 12 pence to 12.12 pounds by 0945 GMT. As with many Internet ventures, future prospects rather than current profits are driving the enthusiasm for Freeserve. Dixons said that from its beginning on September 22 until May 1, Freeserve generated revenues of 2.73 million pounds but made a net loss of 1.04 million. Since pioneering access to the Internet with no monthly fee, Freeserve has boomed to become Britain's biggest Internet service provider (ISP). Its success has prompted rival AOL Europe <AOL.N>, whose leading market position in Britain Freeserve quickly snatched, to say last week it was considering fighting back by abolishing its own monthly subscription fee of a few pounds a month. No more Freeserve shares will go on sale for at least a year after the flotation and Dixons said it would sell a maximum 40 percent more in the year after that. Freeserve earns money from a share of telephone call charges when customers are online, plus advertising revenue and e-commerce. In its first few months, Freeserve's share of telephone call revenues represented a little over half of its total revenue. But e-commerce is expected to take over as the biggest income stream in the current 1999/2000 (April-March) financial year. (Additional reporting by Jane Merriman) ($1=.6305 Pound) REUTERS Rtr 05:53 06-28-99