Dot bomb companies try to pick up pieces

Friday 19th January 2001

By Chris Hutching

Local "tech wreck" companies are being radically restructured while industry leaders and brokers urge investors to keep their fears in perspective.

Listed retail giant the Warehouse has stepped in to run part of E-Loan, a move that recognises e-companies have been unsuccessful in building their own standalone retail brands.

Following a cash crisis late last year, partly due to pressure on the US parent company, E-Loan was split into two units with the Warehouse taking over the credit card side of the business while listed e-Ventures, which set up E-Loan in this country last year, continuing to sell software products.

Other companies in a similar situation, such as would-be internet retailer E-Force, plan to go back to shareholders over the next month or so with revised business plans. E-Force has abandoned its internet retail site and controlling shareholder Bill Farmer is restructuring the group, with assets including Product Sourcing International.

But E-Force will have to run hard to catch up after losing $2.9 million on its abortive web portal last year. And it still has lease liabilities that date back to its former existence as a property developer under the name Paynter Timber.

Commitments on head leases struck in the early 1990s for the Forsyth Barr building on Armagh St and a factory at Hornby, will require nearly $1.4 million by the end of 2005.

Mr Farmer said staff were working hard with him to turn the situation around and develop a comprehensive business plan. The share price bounced up marginally to 5.5c.

Meanwhile ASB broker Tim Preston said some of the dire stories about the US "tech wreck" had been over hyped and e-commerce technology was providing significant benefits for New Zealand companies.

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