Spark Ventures, the tech VC house borne out of NewMediaSpark – one of the dot.com days’ key investors – is heading for a shareholder showdown at its annual general meeting this coming Friday, with a minority shareholder urging fellow owners to block a proposed management buy-out.
The company reported a £3.9 million annual loss and put a freeze on all new investments two weeks ago. It proposed to shareholders a rescue plan under which its top team of Thomas Teichman, Andrew Carruthers, Jay Patel and Andrew Betton would perform a management buy-out (read full detail).
But Vine Street Capital, which holds 8.2 percent of Spark, on Monday began trying to derail the process, writing to shareholders to say the plan undervalues Spark and would only “give a reward for failure to an executive management team who have presided over consistently loss making investment activity since the company’s listing in 1999”; it instead wants the process opened to bidders (read full letter).
Spark’s board has sent out a response describing Vine Street as only a “relatively recent shareholder” – it also revealed it’s received an alternative bid to compete with the management buy-out but says “it is lacking in detail on a number of points”. (read full response).
Why is Spark in this situation? In its full-year earnings, the company said..
— IMImobile and Kobalt, which together make up more than half of its portfolio, grew their revenue but didn’t “trigger a valuation event”.
— It wrote down £900,000 against Brent Hoberman’s interior design site MyDeco because “retail markets have continued to suffer”.
— “Skinkers has had a disappointing year in sales as its pipeline of financial services customers was hit particularly hard, leading to a refinancing at a substantially lower value and reducing SPARK’s net assets by £4.1 million.” Skinkers is spinning off its Livestation TV app, which is being funded by other investors.
— Spark made a £3 million loss against its investments, lost £500,000 on its service office operations, lost £300,000 on its former DX3 and Aspex investments.
Other investments include Mblox, We7 and Firebox.http://www.sparkventures.com