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Pricing concerns in a turbulent market blamed
The Financial Times reports that Continent 8 Technologies has pulled its planned flotation in London due to market turbulence and concerns that at this time the offer would not achieve its price targets.
According to the newspaper the company, which works with Mohawk Internet Technologies in the Quebec Province of Canada to provide internet infrastructure to online gaming sites, is postponing its IPO. The Mohawks own 40 percent of the company.
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Continent 8 has an exclusive agreement with Mohawk Internet Technologies at Kahnawake to offer its hosting services to owners of sites in the fast-growing $12-billion US online gambling industry. MIT's powerful computer servers have made the Kahnawake reserve, near Montreal, one of the world's most popular jurisdictions, hosting over 300 online gambling sites. Its 61 customers include the world's top five poker sites and seven of the top 10 online casinos, according to Continent 8's preliminary prospectus.
Continent 8 wants to raise money for a "global grid" of computer centres, including MIT's facilities, to serve the gaming industry and other e-businesses.
The Kahnawake business is remarkably profitable, and pays no taxes. MIT posted a net profit of $17.4 million U.S. in the year ended March 31 on revenue of $24.7 million U.S., according to the prospectus.
Tobin said the firm will now look at other financing options such as a private-equity investment or borrowing money to finance its expansion. But a public offering in October or November remains its preferred course.
Besides the MIT operation in Kahnawake, Continent 8 is completing a computer centre in Singapore and building another facility in the Isle of Man, off the coast of England. It's also looking to acquire another centre in Europe. Tobin said the firm is also negotiating with the Mohawks to participate in the building of a second centre on the Kahnawake reserve.
The FT article additionally suggested that Continent 8, which has an Isle of Man office may also be scrutinised by potential investors as to the legality of its operations in Canada, which might be a stumbling block.
In earlier press material (see previous InfoPowa reports) Continent 8 was hoping to raise $133 million in an AIM flotation in order to expand operations.
Continent 8 chief executive Michael Tobin later said the firm will now look at other financing options, but a public offering in October or November remains its preferred course. "Due to the market conditions, the investors pulled back," Tobin, a longtime adviser to MIT, said from Continent 8's head office on the Isle of Man. "We fully intend to see how the markets change by the autumn and look at doing the IPO then."
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