Blue Freeway set to go private
Blue Freeway’s turbulent two years on the ASX seems set to end, following an announcement to the Australian Stock Exchange of a proposal to take it private.
The company has been in a trading halt since last week, and the move is not entirely unexpected, given Blue Freeway’s depressed share price.
In a note to the ASX, Blue Freeway’s company secretary Richard Shaw said:
“BlueFreeway has been approached by its major shareholder, IPMG, to discuss a proposal to privatise the Company. The proposal is conditional on a number of specific conditions being met including the renegotiation of earn outs with certain portfolio companies. IPMG currently holds approximately 73% of BlueFreeway voting shares, $11 million in secured debt and $7 million in secured convertible notes. The company’s independent director is considering the proposal. It should be noted that there is no certainty at this point that a transaction will eventuate.”
When Blue Freeway floated in October 2006 it was capitalised to the tune of $60m, but its share price declined to about a tenth of that. Last month it declared a $14.6m loss, which it partly blamed on “earn-out obligations previously struck at top-of-market conditions”.
A spokesman said today: “There are exceptional companies and people within the Blue Freeway group. The reality is that the current balance sheet does not provide this group with strong foundations for the future. Blue Freeway is working with financiers to put appropriate structures in place to improve this situation.”
Companies within Blue Freeway’s portfolio include MassMedia, Holler, Blackglass and JSA Digital, plus PR firms Max and Spectrum.
After the dramatic departure of founder Richard Webb at the beginning of last year, IPMG, owned by Michael Hannan, took a major stake in the company.
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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I used to work for one of the companies that formed the bluefreeway group.
It doesn’t surprise me at all that Bluefreeway’s shareprice dropped so significantly nor that it is going private again.
During the purchasing process / rolling into the group there didn’t seem to be a clear strategy for one salesforce selling all the services and products across the group.
The companies were (mostly) competing for client dollars individually and there didn’t seem to be a plan to address that.
Lets hope that as a private company they figure out hot to maximise dollars from clients.
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How can anyone be surprised that the company all but collapsed so soon after “previous management” was exited. A public company without a CEO, COO (sorry but stop-gap heads lacking vision and running purely on emotion simply doesn’t count as successors) or a sales force is never going to grow – something Hannan and his team of advisors must have been aware of.
There was a crystal clear strategy for a single sales force selling all portfolio company solutions across the group – it was a platform called blu. Another innovative solution ignored and run into the ground by new “management”.
Taking BlueFreeway private won’t improve the company’s success or offerings. There is now no communication with the portfolio companies at all. The problem lies with the current management.
Suprised it’s going private? No!
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