J2C, which was once called Just2Clicks and operates business-to-business internet portals, admitted yesterday that the concept had not caught on and said it was shutting up shop with plans to return £33m to £35m in cash to shareholders.
Under a closure deal that needs approval, the company's chief executive Karl Watkin would walk away with £3.96m to £4.2m. He initially invested only a "five-figure sum" in the business. Graeme Lowdon, who stepped down as operations director in February, would receive £3.6m to £3.85m for his 11 per cent holding.
J2C said yesterday it was selling its 40 per cent stake in its e-cement venture to Blue Circle Industries, the venture's co-owner, for £140,000. E-cement had been valued at about £50m last Spring. It has also in exclusive talks for four weeks with a buyer, described as a "blue-chip private company", interested in BestValueZone, which provides e-commerce services to government organisations. Should this deal materialise, it would probably safeguard the jobs of all of J2C's 58 staff. The business could also retain its stock market listing under the deal. The rest of the company's operations have been or will be closed.
Mr Watkin, the founder and a 12 per cent shareholder, said: "This time last year, 80 per cent of the world said they'd have an e-commerce solution for their business, and it's just not true, so no matter how good your product, the customers aren't there to buy it."
He added: "It's sad at the end of the day but I reckon if we'd been giving gold bars away it still wouldn't have worked."
J2C, which is valued at £29.5m but has about £36m in cash left, said it thought it would have £33m to £35m to return to shareholders, equivalent to a price per share of 35.5p to 37.5p. Its shares closed up 14 per cent at 32p last night, but far from its all-time high of 244p.
J2C raised £50m net when it floated in February last year at 150p a share and has spent about £13m net over its short life. It is burning about £325,000 a month. Its shareholders, which include Prudential, Invesco and 3i, will be voting on whether a return of cash is the best route forward. The board of directors will not be voting.
"It's pointless carrying on trying to look for a needle in a haystack that satisfies everybody, so we're letting everybody make the decision themselves to have the cash back," Mr Watkin said. "We're not voting on it or making any recommendations."
He now plans to chair Data Trial, a Newcastle-based provider of internet-based data-capture technology that he expects will be floated or sold next year. He also chairs a business that owns the European distribution rights to China-based ZTE's 3G mobile phone infrastructure. In the six months ended 31 March, J2C recorded a pre-tax loss of £34.2m.Reuse content