EightBlack.

It’s time for the management at the embattled digital group to come clean.

Just 2 days ago, after just 3 months, Danny Herceg - the man who was recruited to primarily re-build the company’s finances due to his high profile legal and banking network, quit.

Along with him went co-founder, Tony Charara. Although Charara is apparently still heavily involved with the finances of the group (more later).

According to the March 12, 2008 press release by BlueFreeway,

“Danny is a senior corporate and commercial lawyer with particular specialisation in capital raisings, mergers and acquisitions, privatisations, restructurings and venture capital. In addition to Danny’s capital raising experience, he also advises on various corporate law issues including prospectus issues, corporate governance, and employee share and option plans, as well as joint ventures and non-equity funding”.

The BlueFreeway shares are still in a protracted trading halt. It’s been a month now. This is not really their fault. If their taking advantage of a legal loophole within the charter of the ASX, then so be it.

But its clearly a fault that rests with the ASX. I just dont think its appropriate corporate regulation by the ASX to allow a company an unreasonable time frame (like a month in this case) to ascertain their financial viability. How hard can it be?

I’d be keen to interview both guys - but clearly they may have better things to do nor will they probably be allowed to talk to anyone. Or want to.

Interestingly, Tony Charara cites his time at BlueFreeway as something of an achievement with his new venture here. Not sure if I agree with the logic.

The problem with not communicating to the shareholder base is that in the absence of any concrete direction and advice, people will make and form their own opinions. And because there is a lot of pissed off investors and staff, people want to vent their anger. And rightly so.

I’m noticing this anger within the comments I’ve received over the past few weeks. And by the slew of email that has hit my gmail account.

Consider this “re-counting” of events that were relayed to me.

BlueFreeway, in its quest for world domination, went out and acquired 3 separate companies in Thailand. This was late last year, October, to be exact. Quite what for, I’m not totally sure. The companies were Media Synergies, Planetutech and Reflexible. The press release is here. The 3 acquisitions, according to the BlueFreeway announcement, cost the company A$1.5million (for all 3) and would add $1 million in revenue to the group.

Bill Emden, the Group Managing Director for BlueFreeway Asia stated that the acquisitions would allow BlueFreeway to service the rapidly growing Thailand digital media industry with world class talent.

However, if you are to believe the comments by numerous staff in Thailand, nothing could be further from the truth. For one, according to insiders, the much hyped “Blu” portal was nothing but smoke and mirrors.

Second, the access to technology and financial resources to grow and expand the “rapidly growing Thailand digital market” never eventuated.

When I tried to find out more about senior execs like Bill Emden, Google came back with this. I decided to look no further. Apparently, Emden is no longer with BlueFreeway, and nor are any of the other “head office” staff in Asia. I am told that the number one listing under Google for Bill Emden and the Bill Emden who ran BlueFreeway in Asia are one and the same person. See here for proof.

Whenever businesses are put under extreme pressure, like BlueFreeway is now, rash decisions are made.

Take for example, the alleged recent requests by head office to owners of several BlueFreeway companies to buy back their businesses. The only trouble is though is that many of the businesses that BF acquired, they acquired 100%, lock, stock and barrel. If you take the 3 entities in Bangkok for example, as stated above, they paid $1.5 million for all 3. This amount wouldn’t have made life changing differences to anyone.

All it did most probably was shore up some debt and return some “sweat” capital back to the respective owners.

According to some, Sydney is now pressuring these offshore entities to buy back their companies for the original amount paid. All I can ask is “why”. And what makes the head office at BlueFreeway think that they can do this? It gets even worse. Apparently threats and intimidation are occuring, resulting in even more bad blood between employees, shareholders and owners.

I actually feel sorry for those people who only sold a percentage of their company to the fast talking sales guys who pedalled the original BlueFreeway dream.

At least the people who sold 100% made the call at the time they did their deal. They made their bed. Now they’re lying in it. They can either quit and start again - or ride the storm out and wait for events to unfold. Either way, they’ll be better from the experience. They might not think that now, but they will be.

But the people who agreed to sell 51% or 27% or whatever the number, are stuck with this noose around their neck. More like a boat anchor.

Whatever happens, BlueFreeway need to make the call. And that call should be to quit now. Let the respective businesses (which have some world class talent within them) get on with their lives.

I think their stock will survive all of 5 minutes on the ASX, should they resume trading. There’s probably an unlimited number of “sell” orders queued and waiting to go, no matter what the price.

I do not for one minute, believe this is a salvageable ship. The damage has been done.

Too many people have left, including the majority of the founders, staff morale is in the toilet, the stock is suspended, past owners who are now employees are disgruntled and distracted and the vapourware behind their original proposition is now exposed.

The conclusion I have (and its obviously a personal one) is this. People get appointed to the board - and the smart ones promptly quit (after they see what’s really there). There appears to be no one in charge. Demanding that the 100% owned companies buy back their businesses is sheer desparation and the deafening silence to the market (which is now in its 4th week) can’t be good.

And I have no idea what Michael Hannan and his company, IPMG intend to salvage from all of this - but it can’t be much.

The saga will no doubt continue. Which is a shame. It needs to end. And quickly.

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This entry was posted on Wednesday, June 4th, 2008 at 3:51 pm and is filed under News, People. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.