Dotcom exit puts Baboom's A$4.5 mln pre-IPO offer on hold
By Paul McBeth
Oct. 3 (BusinessDesk) - Internet entrepreneur Kim Dotcom's exit from the share register of online music service Baboom
has put plans to raise A$4.5 million in a pre-float offer on hold.
Dotcom's family trust, Coatsville Trustee Services, sold its 45 percent stake in the music business to fellow
shareholder Vig Ltd, taking Michael Sorensen's ownership to 90 percent. That change of ownership has stalled plans to
raise money ahead of a prospective initial public offer of between $3 million and $4 million while it revises its offer
documents.
"Given the recent changes in ownership of the company and the complete removal of Kim Dotcom from all facets of Baboom
Ltd, we have put the offer on hold until we complete a revised IM (information memorandum)," Ben Yeo of Novus Capital,
the offer's financial adviser, lead manager and sponsoring broker told BusinessDesk in an emailed statement. "Once the
Baboom Ltd Information Memorandum has been completed we will re-open the offer with a revised capital structure as well
as a large number of updates both to the board, management team and Baboom platform product offerings."
The pre-IPO offer was launched in mid-July and was initially scheduled to close in August, before being left open-ended.
The proceeds were to be spent on buying a 20 percent stake in the ONEall social network login platform, developing
Baboom's mobile platform, integrating back-end systems and buying and licensing music. That would have enabled a hard
launch for Baboom's services either late this year or early 2015.
Baboom is looking to woo musicians and licence holders by offering them up to 90 percent of revenue generated by the
platform through downloads, subscriptions, merchandising and ticketing, essentially supplanting the traditional network
of agencies.
The offer was touted as a speculative investment involving significant risks, citing Dotcom's Megaupload as a potential
hurdle to attract music suppliers given its alleged copyright infringement and digital music service business models as
challenges.
Still, a tie-up with Dotcom's Mega file-storage business was seen providing a potential 8.4 million plus users, using a
so-called Megakey to let users build up credits by watching online ads, which could then be used to download music.
Customers would also get up to 50 gigabytes of storage for music they purchased. Baboom would only have an exclusive
licence on such a deal for between one and three years, according to the withdrawn offer document.
Dotcom has reined in a previously high public profile since the Sept. 20 election after the Internet Party he bankrolled
failed to coat-tail into Parliament when partner Mana lost its seat in the Te Tai Tokerau electorate.
The internet entrepreneur stepped back from the two businesses he created in recent years to focus on fighting attempts
to extradite him to the US, where he faces charges of mass copyright infringement and money laundering of more than
US$500 million, and setting up the Internet Party.
(BusinessDesk)