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28 June, 2006 - 11:26 By Staff Reporter

Tomb raider bid to buy up Ionica’s tax losses

It’s been dead eight years this autumn but the business formerly known as Ionica has become a takeover target! It’s been dead eight years this autumn but the business formerly known as Ionica has become a takeover target!

Joint administrator Tony Kett of PricewaterhouseCoopers reveals that two proposed deals last year were unsuccessful but that discussions with a third prospective purchaser are ongoing.

The subject of the prospective takeover is the former wireless telco’s sizeable tax losses, which are proving attractive to a business with a large tax gain that detects an advantageous offsetting opportunity.

With such tight anti avoidance laws at the heart of the UK tax regime, such a deal has to be stacked up in accordance with stringent Inland Revenue rules. You can’t just bounce tax gains and losses between businesses when you feel like it.

While the current talks are confidential, the directors of Micadant plc – the company formed to oversee return of lingering assets to creditors and shareholders – are sufficiently confident to predict that they should receive a further £1.79m from Ionica’s estate.

Net assets at March 31, stood at £2.3m – around 1.3p a share – not too far short of Cambridge IT company Tadpole’s current 2.05p and Ionica went bust in October 1998!

Tony Kett believes 2006 really does spell the last rites for Ionica/Micadant. "The administration will definitely be completed this year," he said. "It’s hard to believe it has been nearly eight years but there are longer running administrations – such as Maxwell and Polly Peck."

The August AGM could well prove the last hurrah.

The primary purpose of the administration order made by the courts in 1998 was to achieve a more advantageous realisation of Ionica’s assets than would be effected on a winding-up.

Kett said that a third catch-up dividend scheduled to be paid last autumn was now set to be distributed and that around £60,000 will be rolled back on claims of £7.5m.

Unless the realisation of the remaining tax losses proves achievable, the administrators believe further significant receipts are unlikely.

This remarkable Lazarus business, which went bust owing around £250m, has now returned £38.2 million to shareholders.

Founder Nigel Playford and three fellow non-executive directors who pledged to salvage what they could for shareholders – and Playford is the 10th biggest with 5.399 million shares (3.1 per cent of the company) – have each earned £15,000 a year from 2003 for their rearguard action on shareholders’ behalf.

The chairman, Tony Coleman, has been paid £20,000 a year in that time.

Administrator PwC has earned more than £5.5m in fees since October 1998 while legal fees in that time have topped £4m.

Salary and other employment costs have passed £5.04m.

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