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Spike gets equity injection from Asia

Spike gets equity injection from Asia

Internet company Spike CyberWorks will receive an $11 million cash injection from Hong Kong-based financial and technology services firm techpacific.com.techpacific.com will acquire the 30 per cent shareholding in Spike, presently owned by Hong Kong-listed Pacific Century CyberWorks (PCCW), in an effort to strengthen its e-services arm, tp Factory. The deal will take place as an equity swap, with PCCW receiving new shares of techpacific.com and thereby maintaining an indirect interest in Spike.techpacific.com will also subscribe for newly issued shares to bring its total shareholding in Spike to 51 per cent.

Since restructuring its business unit in early November, Spike has been keen to break into Asian markets. "The injection of capital resulting from the partnership [with techpacific.com] will allow Spike to continue to build its leading digital services business in Asia," says John McGuigan, executive chairman of Spike. "In addition, we are delighted to be maintaining our involvement with PCCW."

He denied PCCW had been looking for an exit, describing the decision as having mutual benefits for all parties. PCCW acquired its 30 per cent share of Spike CyberWorks in June.

McGuigan says there are no plans to alter the company name despite PCCW taking a back-seat role.

At Spike CyberWorks' AGM last week, McGuigan pinpointed the expansion throughout Asia as the backbone of the company's future growth. "The digital services business has been positioned as a key provider of innovative, creative and technically excellent services in Australia, Japan and Hong Kong," the chairman stated in his opening address.

"In the short term, Japan is regarded as a particularly attractive market within which to develop the service offering of Spike CyberWorks. Cost reduction measures have been implemented in Spike CyberWorks with the objective that the digital services business will operate on a cashflow break-even basis by the June quarter of fiscal year 2001."

Part of these "cost reductions" included the downgrading of Spike's Hong Kong office in favour of Tokyo and Sydney. It has been reported that the Hong Kong division founders have since quit.

While Spike Inc, Spike CyberWorks' US-based sister, will benefit from a strengthened business model, McGuigan feels the current deal will have little impact on the overseas branches.

Meanwhile, techpacific.com's tp Factory e-services arm, one of its four key business sectors, has been exploring ways to grow organically and through acquisition for sometime, according to Johnny Chan, chief executive officer of techpacific.com.

"The proposed deal with Spike CyberWorks, which has a strong presence in the promising Australian and Japanese markets, will serve as a platform to significantly scale our business regionally and allow us to gain immediate access to a region-wide multinational client base," says Chan.

The deal is due to be finalised by the end of January 2001.


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