Milloy Reid Wong cuts ties with Escalator for $1

Friday 2nd March 2001

SETBACKS: EAL has not had a smooth ride with its escalator advertising

By Nicholas Bryant

The major shareholder in local startup Escalator Advertising, Milloy Reid Wong, said yesterday it had cut its ties with the company for the nominal consideration of $1.

Milloy Reid Wong bailed out after deciding not to pay a second call of 50c a share for partly paid EAL shares on September 29 last year.

"In its simplest terms it was an offset deal between money they owed us and calls we owed them and we wanted to focus on Digi-Tech [Communications] of which we are a majority shareholder ... we had about a 10% holding in EAL," Milloy Reid Wong director Hugh Milloy said.

The deal was passed by shareholders at a special meeting on February 9 and involved the acquisition and cancellation of 390,795 unpaid and partly paid shares, 1506 class A shares and 10,127 fully paid shares for $1.

Mr Milloy has resigned from the board of EAL and Milloy Reid Wong now has no interest in EAL.

Set up in 1991 and operating since 1993, EAL has patented and copyrighted a method of attaching advertising panels to escalator steps.

But it has been beset with setbacks such as regulatory problems, the need for constant capital raising from shareholders and, in the early days, cost overruns setting up foreign offices designed to hold EAL licences.

But at the February 9 special meeting shareholders passed a major resolution to buy a 50% stake in Estec, a company registered and operating in the UK, for $750,000.

The purchase will be funded by the issue of new shares in Estec. Escalator Information Systems, a UK subsidiary of EAL, will use the Estec name.

EAL has frequently told shareholders it planned to list.

Numerous indications were made over the years that a Stock Exchange listing would take place but with EAL doing very little business it did not come to fruition.

EAL was most recently said to be planning to list on the alternative investment market of the London Stock Exchange.

While there is little liquidity in EAL stock, so little trading, the Estec deal appears to have been seen as positive by investors.

The last EAL trade on the NZSE's secondary board of unlisted securities was at $2.50 on February 12.

But the $2 shares have only one optimistic seller in the market at present, with an asking price of $10 a share.

In the past two years EAL shares have traded as low as 2c a share.

Last week Milloy Reid Wong said it was co-operating with a Serious Fraud Office investigation into the complex deferred-payment sale of shares in its company Digi-Tech Communications to 110 investors.
Those investors are being pinned with $100 million of tax, interest and penalties by Inland Revenue after making claims for tax losses the IRD viewed as tax evasion.

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