Metroland's $5m Kgrind Investment Not A Done Deal
Sydney Morning Herald
Wednesday August 9, 2000
Property developer Metroland has advised shareholders it is yet to make a decision on whether to proceed with a $5 million investment in Internet content provider KGrind, contradicting comments by KGrind management that the rescue deal was done.
Metroland said it had provided a $1 million loan last week half of which has already been spent to the former youth-oriented broadband venture. The loan is secured against KGrind assets and, should Metroland decide not to proceed, will be converted into equity of 15 to 20 per cent.
Metroland director Mr Frank Shien said a decision on whether to take a controlling 51 per cent would be made by Friday.
On Monday, KGrind sacked 39 staff and announced the departure of company founder and chief executive Mr Jon Peters.
``The decision of Mr Peters to resign, and the decision to discontinue the updating of the youth portal, is viewed by Metroland as part of the necessary restructuring," Mr Shien said.
The restructure had seen KGrind's expenses cut from $1 million to $360,000 a month, he said.
Through Metroland's relationship with Union Pacific, KGrind had secured contracts with Malaysian companies that should see the company, now a business-to-business Web services provider, break even as soon as September, he said.
Mr Shien said a meeting would be held with KGrind's initial venture capital providers, who had poured in $10 million, including a $2.3 bridging loan, to discuss a restructure of the board.
The KGrind board at present includes Macquarie Technology's Mr Bill Bartee and AMWIN's Mr Paul Riley.
© 2000 Sydney Morning Herald
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