Scoot selling Loot to avoid bankruptcy

Scoot, the ailing online directories business, said on Thursday that talks to sell Loot, its profitable classified advertising business and most valuable asset, were still continuing in a last-ditch attempt to stave off bankruptcy.

SCOOT.COM, the ailing online directories business, yesterday said that talks to sell Loot, its profitable classified advertising business and most valuable asset, were still continuing in a last-ditch attempt to stave off bankruptcy.

Shares in Scoot rose 9 per cent on the announcement, which the company made to quell intense media speculation that the sale of Loot was on the verge of being agreed.

Scoot bought Loot last year for £190m at the height of the internet frenzy. The business is expected to raise just £50m to £60m. Interested parties are understood to include a number of strategic buyers, including Trader.com, a French publisher of classified-advertisement newspapers, and financial buyers.

Scoot faces a two-pronged cash crunch at the end of the month unless it finds a buyer for Loot. To compound the company's warning two weeks ago that it would run out of cash by the end of the month unless it secures a £15mbridging loan, a £14m convertible debenture also matures on 28 August.

A company spokeswoman said that the three big US institutions that hold the debentures were expected to agree to reset the maturity date. "They don't want Scoot to have to issue more shares," she said. Such a move would trigger a takeover bid from the debenture holders.

Earlier this month, Scoot warned that unless it raised capital from external sources it would be unable to trade beyond 27 August. Scoot shares, which peaked last year at 351.5p, closed up 0.27p at 3.27p. The stock rose from a record low of 1.2p in the last 10 days.

The company, led by chief operating officer Jon Molyneux, was forced to sell its loss-making continental European operations last month to Vivendi Universal, the French entertainment company that owns 19.2 per cent of Scoot, for just 1 euro (61p). Scoot Europe, which was set up as a joint venture with Vivendi last year had £92.5m in liabilities.