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Chariot Goes It Alone As It Writes Off Transcom |
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Written by Adam Gosling
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Monday, 24 July 2006 |
Adelaide-based ISP has announced it will launch a VoIP service
next month despite its relationship with Transcom falling in the gutter. The
company has also announced the deal in which it invested $6 million in Transcom
is likely to be worthless.
In the midst of a legal bunfight
with its partner Transcom, Chariot has committed to continuing with its plans
to launch a VoIP service including plans from $10 per month.
The company has said that the service it plans to provide
will not use the Transcom technology despite it paying $5 million to acquire a
37.74 per cent stake in the London-based Transcom International and a further
80 per cent stake in the Transcom Australia subsidiary and a licence agreement
valued at $1 million.
This initial deal was reportedly restructured after what Transcom Australia
claims was a failure by Chariot to fund its operations.
As we understand it, Chariot's investment in Transcom was converted
to a wholesale distributor agreement. Transcom is currently suing Chariot for
$3.2 million over the soured deal.
Chariot recently issued an EBITDA downgrade to the market and
has increased its debt profile.
The day before announcing it would ‘go it alone' on the
provision of Voice over IP services, Chariot also informed the market that it
now believed the investment it made in Transcom is "uncertain".
"Chariot now advises that considering the legal developments
between Chariot and Transcom and Chariot's assessment of Transcom's future earnings,
from information available to Chariots directors at this time, it is considered
that future cashflows and returns to Transcom shareholders are uncertain. The
financial effect of claims and counter-claims associated with the Transcom litigation
is also unknown at this time," says the statement.
"Subject to a detailed examination of this matter, and
obtaining further advice, the Chariot board advises that it will most likely
impair the value of the investment in Transcom to zero. This means that in accordance
with AIFRS, a non-cash charge equal to the write-down will be included in Chariot's
statement of financial performance for the 2006 financial year and will reduce
EBITDA by an amount of approximately $6 million," the statement reveals.
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