Small Talk: Cash shells heading off to Ofex as deadline looms

Ofex is salivating at the prospect. Already it is carving out a niche
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The Independent Online

Dozens of AIM-listed cash shell companies could be forced to move down to the fringe stock market, Ofex, to avoid a deadline of next April for finding a new operating business.

The London Stock Exchange has begun contacting cash shells' advisers, telling them to speed up acquisition plans or face having the company delisted.

But it admits that it has no idea yet how many companies may fall foul of the deadline, or how many AIM investors will be affected by an expected exodus of companies. "We are currently piling through the companies to determine whether or not they can be defined as cash shells," an AIM spokesman said.

AIM changed its rules last spring, in the hope of avoiding shocks such as have occurred at the cash shells Easier and Langbar, where millions of pounds in supposed assets are unaccounted for. After an outcry from advisers, it backed down on proposals that new cash shell companies must acquire a real business within a year of flotation. However, it did say that existing shells, if they had less than £3m in the bank, would need to do a deal by 1 April 2006. Investors have worried since that companies would be bounced into a bad deal for the sake of meeting the deadline.

Companies which have turned themselves into shells by the disposal of all their operating businesses - a sad fate for many failed dot.coms, for instance - also have a deadline, one year from their last annual shareholder meeting.

Ofex is salivating at the prospect. Already it is carving a niche as a destination for new cash shells, set up with less than the £3m minimum require for AIM eligibility. Thirteen such companies have joined so far and the first, JGP Investments, is about to ask shareholders to approve its transformative deal. It is turning itself into Creative Entertainment, a company which helps to organise rock concerts and pop star appearances. Expect details of the deal soon.

The Seeing eyes have it

A particularly interesting flotation is coming up this week. Seeing Machines is an Australian company with a bit of kit that can scan drivers' eyes to make sure they are paying attention to the road ahead and not being distracted or falling asleep. The technology was developed at Volvo and the Australian National University, but was spun out into a separate company because it might have potential uses outside the motor industry.

The £1.25m fund raising - which gives Seeing Machines an initial market value of £7.65m - will go towards commercialising the product and developing kit for healthcare, sports and security markets. "The data collected by the technology can be used for detection of fatigue, inattention, distraction or interpretation of simple emotional states," the company boasts.

Zzzzzz ... more delays

Was that a profit warning from Z Group? For a company with only a letter for a name, it was peculiarly unwilling to spell out the consequences of a significant product delay slipped into the company's financial results last week, the first since the technology company floated back in June.

It originally promised to launch OnShare - an instant messaging system it says will rival MSN Messenger as a means of swapping files and chatting online - by the end of summer. But on Monday, it "confirmed" the launch date will be in the first quarter of 2006. The weather has been unusually clement this year, but it is stretching things to imagine that summer lasts until November. Small Talk thinks that perhaps the reasons for the delay should have been communicated explicitly to the market earlier. An inauspicious start to life on AIM.

Nasstar is born

Lord Daresbury, the chairman of De Vere hotels and Aintree racecourse, has been appointed to chair Nasstar, a new company which hosts software for small businesses, cutting out the need for them to buy software licenses. It is being introduced to AIM soon.

Bollywood stars in £50m float

Investors are about to get a chance to put money into the burgeoning phenomenon of TV-over-broadband, a new way of accessing television programmes and channels. The owners of Bollywood.tv, which allows subscribers to watch Indian films over the internet, are considering plans to float the business with a price tag of £50m.

Opus Media, whose DVD-quality streaming software lies behind Bollywood.tv, reckons it could ultimately spin out a series of these niche television sites. It is in talks with film companies, sports event organisers and even a rolling news network about putting their content on the web.

Opus is about to hire an investment bank to advise on the float, either of Bollywood.tv or the whole company.

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