World Online on the Brink

LONDON (04/17/2000) - Nina Brink had a reputation for being a tiger. But some say she's more of a sacrificial lamb. The short but bitter scandal of Dutch ISP World Online took an abrupt turn Thursday when Chairwoman Nina Brink resigned from the company that just a few weeks ago was heralded as the new face of the European Internet.

Brink faces legal action in the Netherlands for selling off shares in the company before its March initial public offering, and the company faces a round of legal and government scrutiny across Europe. Brink has removed herself from the public eye, declining to speak about her resignation or about her sale of two-thirds of her World Online shares to three investment funds in December.

More than a million of those shares were dumped on the market shortly after the IPO. Though her actions were referred to circumspectly in the prospectus, there was public outcry in the days after the offering, as the impact of what Brink had done became clear.

But even as the company casts about for supporters, there's a growing feeling in some quarters that Brink is a lamb on the altar, taking the fall for the other parties in the offering. Given her reputation as a hard-nosed businesswoman, it wasn't hard to believe she had misled bankers and shareholders by cashing in her shares. But that wasn't the case.

The World Online board, made up of investors such as majority shareholder Sandoz Family Foundation and Intel, another investor, knew about the sale before the IPO. Goldman Sachs and ABN Amro, which distributed the prospectus, also knew, as did the Amsterdam Exchanges. "She could be a great scapegoat," says Bert Siebrand, a senior analyst with SNS Securities in Amsterdam. "The banks are responsible for the prospectus.

The stock exchange should check everything and approve it. Nina Brink is a bit of liability right now. It's great for the banks, great for Sandoz," he added about her departure. But whether her departure is good for the company is another matter. "The company will do a lot better if she stays, but [financial institutions] don't give a damn about that," says Chris Matthews, the founder and former CEO of Telinco, a British ISP that World Online bought in January.

"This is more of a public relations problem than a fundamental problem.

Something Nina did was silly, and the market collapsed at the same time."

And certainly the other companies involved in World Online are not in the clear. ABN Amro and Goldman Sachs, the two investment houses that led the float, also are named in the Amsterdam legal action. The Amsterdam Exchanges, which hoped the World Online offering would make it the exchange of choice for European Internet stocks, has had to ward off criticism that it has been slow to enforce its disclosure rules. Investors, meanwhile, have stood firm. "For the foundation, nothing has changed," says Dr. Jorg Denzler, spokesman for the Sandoz Family Foundation. "We are long-term investors. Even if the share went down in a heavy way, this doesn't change our opinion. We will stay as a very important shareholder in World Online."

World Online's remaining executive staff members said this week that they need to get past the bad publicity. They say they are not ruling out the possibility of a merger or takeover, but are eager to use the more than $2 billion raised in the offering to expand their business and consumer services. The managing director of World Online's U.K. operations, Simon Preston, said he thought the world would overlook what he called "the little brouhaha in Holland."

Matthews, who offered this week to take over for Brink, agrees. "In general terms, it is a very good company. There are no underlying problems," he says.

"It's just very unfortunate Nina Brink has blotted her copybook. She's put her foot in it."

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