Music not so sweet for IT Capital

By Phil Boeyen, ShareChat Business News Editor

Wednesday 11th April 2001

Tech company IT Capital (NZSE: ITC) is likely to receive less than half what it invested to get into the online music business following the sale of US-based EMusic.com.

ITC owns less than 1% of EMusic.com, which it acquired after EMusic took over music portal tunes.com in February last year in a US$130 million stock for stock deal.

IT Capital had invested US$500,000 in tunes.com in June 1999.

Universal Music Group and EMusic have signed a definitive merger agreement under which Universal Music will acquire all of EMusic's outstanding shares at a price of US$0.57 per share.

Any shares not purchased in the tender offer will be converted into the same cash price in a subsequent merger.

EMusic's board of directors has unanimously approved the transaction.

EMusic currently has 43.218 million shares on issue. Calculating ITC's stake at 1% that leaves the New Zealand tech investor with around 430,000 shares worth approximately US$245,000.

The US57 cents price being offered for EMusic compares with a 52 week high for the stock of US$5.12 and a low of US16 cents.

ITC's chief financial officer, John Dakin, says the investment had been written down last year and had no value in the company's accounts.

ITC, which reported a profit of around $5 million in the half-year ended September, has its main investments in Terabyte, Deep Video Imaging, Golden Orb and Virtual Spectator.

The company last year sold its $1.5 million investment in Exo-net to Australia's Solution 6 for $9.6 million in cash and $3.1 million in stock.

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