Orcon looks for more capital

TOM PULLAR-STRECKER
Last updated 11:58 27/02/2014
Greg McAlister
Reuters
Orcon managing director Greg McAlister.

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Internet provider Orcon says it is seeking additional investors and is not ruling out selling a majority stake in the firm.

Chief executive Greg McAlister downplayed a media report that said the company was "reaching out for help", describing that as "a journalistic opinion".

The company had been going through "great growth" and was looking for more working capital to continue funding that, he said.

McAlister would not say whether Orcon, New Zealand's fourth-largest internet provider, was cashflow positive, but said it was making good earnings before interest, tax, depreciation and amortisation.

"We are seeing customer growth," McAlister said.

"Customer churn has gone down and average revenue per user is going up - which I bet is bucking the trend of all the other ISPs - and our brand preference is going up.

"The metrics you run an ISP by are all as healthy as they have ever been."

Orcon had a very supportive bank in ASB, which was confident in its strategy, he said.

"We are not going broke. Shareholders rather than putting in more money themselves are seeing if there are other people who want to do that."

Orcon has not disclosed who its beneficial owners are, shielding its shareholders behind a trust structure.

The company was acquired by the unknown group from state-owned enterprise Kordia last year for a price that Fairfax understood to be between $30 million and $35m.

"The current shareholders of Orcon have gone to the market looking for additional shareholders," McAlister said.

It was too early to say whether a majority stake might be on offer.

"It depends on how good the offer is," he said.

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