Spike Networks shareholders voted unanimously yesterday on the formation of a joint venture company with Pacific Century CyberWorks (PCCW), which will be the core of a company reorganisation already underway.
Spike, formally comprising three divisions, Spike Ventures, Services and SpikeRadio, will become the holding company for two business divisions -- US-based Spike Radio and Spike CyberWorks, the $80 million pan-Asian joint venture.
Spike Networks will hold a 70 per cent stake in Spike CyberWorks, with PCCW's indirectly wholly owned subsidiary, Cyber Convergence, holding the remaining 30 per cent. PCCW will inject an initial $23 million cash and guaranteed revenue in the joint venture with the option to increase its stake to 50 per cent within two years.
Additionally, shareholders voted yesterday to issue a 5 per cent stake in Spike Networks to another PCCW subsidiary, Web Commerce, for $6.3 million.
Speaking at the company's extraordinary general meeting in Sydney yesterday, John McGuigan, Spike's chairman, confirmed that Spike has pulled the plug on its ventures division because of poor revenues and costs.
He said more opportunities exist in the services line of business, although the Spike CyberWorks is not forecast to be cash-flow positive until June 2001.
Spike's internet operations, including its Australian offices as well as the majority of its staff, will be transferred to the new company, which will target business in Hong Kong, Japan and Australia.
The possibility of listing Spike CyberWorks on an Asian stock market or even the Nasdaq was also on the agenda, he said. "We would list to grow the business in Asia . . . and as we build the business, the Nasdaq is not out of the question."
McGuigan also said Spike was seeking a third-party equity partner, who would hold a 30-40 per cent stake in SpikeRadio.
Meanwhile, news that former Spike CEO and founder Chris O'Hanlon faces sexual harassment claims in the US scored little attention at the meeting yesterday.
McGuigan refused to comment on the claims involving O'Hanlon and SpikeRadio DJ, Stephanie "Skittle" King, but confirmed a mediation would take place next week.
McGuigan said the Spike board had approached O'Hanlon with regard to his "inappropriate" behaviour, but O'Hanlon had offered his resignation.
"Pending an investigation, Chris felt it appropriate he be suspended from his role . . . he raised it with the board and then offered his resignation," McGuigan said.
O'Hanlon resigned from Spike mid-April citing health reasons.