By David Symons
IN A sign of the times, Borders (part of the REDgroup book empire owned by Pacific Equity Partners) yesterday unveiled an ebook strategy complete with a classy electronic tablet called Kobo.
Kobo holds up to 1000 books and its $199 price tag positions the device favourably against the $629 starting price for an Apple iPad. A further attraction is the 100 pre-loaded titles that come free. Disappointingly, they have been selected from the shelves of a typical Menzies-era lounge room. Devotees of Rudyard Kipling, Mark Twain and H.G. Wells will be well satisfied, however.
Look beyond the free selection and the good news is that Borders is to price many of its ebooks at a discount - Andrew Ross Sorkin's excellent Too Big to Fail is $17.95 as an ebook, or $32.95 in paperback.
While REDgroup hasn't released details of the relative profitability of ebook titles compared with traditional book sales, it's notable that in the United States, where ebooks have been on sale for around 12 months, the electronic channel accounts for just just 3 per cent of sales.
That won't be enough to turn around the fortunes of REDgroup, which reported a revenue decline of 10 per cent in the half-year to February. The business needs to show top-line growth before sceptical float investors give private equity a chance to exit.
Everest, over the hill
IT'S A rare managing director who can retain shareholder support after presiding over a 98 per cent share-price collapse. However, Jeremy Reid looks set to win the vote when his $500,000 a year position at the helm of hedge fund manager Everest Financial Group (formerly part of the Babcock & Brown empire) is considered by the company's annual general meeting on Monday.
Key to his longevity will be Mr Reid's 19 per cent shareholding, together with a 17 per cent block controlled by Sydney's Blann family who only recently joined the Everest register.
It will take an unprecedented voter turnout for resolutions to spill the board, put by 20 per cent shareholder Wingate Direct Investments, to be carried.
Still, it's going to take a reversal of fortune for Reid to retain investor confidence over the longer term. Most of Everest's larger shareholders bought in over the last 18 months, attracted by a share price that represents a steep discount to net tangible assets of 10¢ a share. But the asset backing is not looking so solid any more. The company is defending potentially costly litigation, and is on track for an operating loss in 2010.
Reid's response has been to launch new funds in a bid to return the company to growth after losing 85 per cent of its funds under management between 2007 and 2009.
A letter sent to Everest shareholders by Wingate this week suggests that their strategy for the company would be ''preserving net assets, reviewing the current business model and restoring profitability''.
Bread and butter cases
WITH IMF sitting on a slate of cases worth more than $1.2 billion, and generating profits that justify its $200 million market value, it's no surprise that litigation funding is attracting fresh interest.
One new entrant, LegalFund, lodged a float prospectus this week for a proposed $6 million raising, valuing the company at $11 million.
Backed by an experienced class-action team, LegalFund's angle is that there's a wealth of opportunity to fund liquidators taking action against company directors for insolvent trading. These smaller actions used to be bread and butter for IMF, but the industry leader is no longer interested in cases worth less than $2 million.
LegalFund is setting out to fund 25 to 50 insolvency matters each year, combined with a smattering of larger class actions. However, with just $3.4 million available, there's little room for error if actions take longer or cost more than its plans suggest.
News from Nexbis
NEXBIS cranked up the fax machine yesterday to advise the ASX that yes, the tiny company is in discussions with the Cambodian government regarding a 15-year deal worth $US700 million ($A800 million) to improve national security systems.
The news didn't impress the market, presumably because Nexbis has already had a couple of false starts with major Asian government contracts.
There is no sign that the contract was put out to tender. Apparently, under Cambodian regulations ''competitive bidding is mandatory for the purchase of goods, services or works worth more than $US12,500''.
The Cambodian Daily said this month that the Nexbis deal could be the largest ever struck in the country - around 35 per cent of the government's total expenditure in 2010.
Nexbis has a market capitalisation of around $70 million.
dsymons@fairfaxmedia.com.au