Scoot.com, the online directories business, took a mammoth loss yesterday when it sold Loot, the classified advertising daily, for £45m in cash to Daily Mail & General Trust, the newspaper publisher.
The desperation of the sale was underlined by DMGT agreeing to lend Scoot £10.5m to fund its loss-making operations until the deal closes which is expected in October. Scoot acquired Loot from David Landau, its founder, in 2000 for £190m.
While Scoot has secured some breathing room, there is uncertainty about whether the company can survive. In June, the company estimated it would require £22m in working capital to break-even in 2003.
The sale of Loot would seem to give Scoot a further £20m in working capital resources. However, the company owes £17m to preferred debenture owners who are free to demand repayment once Loot, Scoot's only profitable asset, is sold.
Jon Molyneux, Scoot's chief executive, said talks with the debenture holders have begun with an outcome expected soon. He reiterated claims that Scoot could yet be acquired.
Mr Molyneux said: "There are a lot of people who have shown interest in Scoot in the past six weeks."
The share price of Scoot enjoyed a rare rally yesterday, closing up 0.22p to 2.25p, to value the group at just £16m.
Scoot was also dumped by Merrill Lynch, which had advised on the June restructuring and acted as the online firm's broker. The company is also to delist its stock from Nasdaq as a cost-saving measure.
During the technology boom in 1999 and 2000, Scoot and Robert Bonnier, its former chief executive, rode internet mania to a short-lived market capitalisation of £2bn when its shares peaked at 351p.Reuse content