LibertyOne slashes and burns
- 13 September, 2000 12:37
The management and board of LibertyOne have decided to free themselves of the majority of their business units in a massive cost-cutting exercise aimed at restoring financial balance at the troubled company.
Acting on the advice of KPMG Corporate Finance, the embattled company has issued a statement to the Australian Stock Exchange detailing its plans to cut its losses on several business ventures. LibertyOne will exit all current investments, with the exception of its ZIVO Web-integration subsidiary, and its interest in the Monet Asia-Pacific joint venture, by the end of the year.
The statement also included a grim forecast of a $60 million loss for the half-year, with the firm currently grasping cash reserves worth a mere $4.5 million. In essence, its new strategy is to focus its entire efforts on short-term survival, rather than long-term growth.
"LibertyOne will concentrate on businesses that are capable of delivering a return to shareholders within a reasonably short timeframe," said LibertyOne chairman, Nicholas Whitlam. "We are eliminating those investments where the lead time to produce a return is excessive or the ongoing cash commitment required to realise its potential is too onerous.
"The board is acting decisively to reposition the company and implement a new more conservative and accountable regime. Now we have implemented these changes, we will work with KPMG to consider options for recapitalising the company," he said.
LibertyOne will divest its interest or renegotiate agreements with financially draining business initiatives such as Satellite Music and uBid, and has contacted all partners involved to discuss its options.
"Over the past month we announced a review of all our businesses and joint ventures," explained chief executive officer, Marcelle Anderson. "We have been in discussion with our partners to look at our options. Most have responded with a message of understanding and a desire to work together to get the best result possible for all concerned."
Anderson has been offered a seat on the board during the transition, and according to the ASX statement, will assume the role of managing director. She concedes that there is little possibility of gaining any new business opportunities in the short term, with the weakened financial condition of the company being a major deterrent to potential partners. The company has decided not to take on any new business ventures until its financial problems have been resolved.
"At the moment, we're not looking to gain any new business until we have really implemented the cost-saving strategy we outlined," said Anderson. "We believe that this strategy will eventually put us on a sound financial platform and the market will start to look at us in a different light."
While few business units were spared the downsizing, LibertyOne's core Web development business, ZIVO, will continue to operate. Zivo provides Web design and hosting, e-commerce and a variety of tools that assist companies in using the Internet to enhance business.
"It is the core business, the most fully developed of our businesses," Anderson said. "Others that we are shedding are younger, some even still in startup mode."
LibertyOne's mid-year accounts are expected to be announced this week.