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Stephen Seawright

Struggling Australian Internet company LibertyOne accused Hong Kong-based investor iReality Group of reneging on a rescue package as the firm was forced to appoint a voluntary administrator.

LibertyOne, in an announcement released by the Australian Stock Exchange yesterday, said that its independent directors were informed on Wednesday that 'iReality would not proceed with the proposed recapitalisation'.

'Accordingly, the independent directors of LibertyOne have had no option but to resolve to appoint a voluntary administrator,' the announcement said.

IReality had agreed to acquire LibertyOne shares for A$6 million (about HK$25.35 million) and options in the Australian company, which would provide up to A$28 million.

In October, the first tranche of A$2.3 million was paid to LibertyOne and iReality took full management control of the company.

IReality rejected claims that it was responsible for the failure to recapitalise the Internet company saying they were 'astonished by the terms of the LibertyOne announcement'.

'The announcement grossly misrepresents iReality's position,' the statement continued. IReality said it had sent a letter to LibertyOne requesting a correction to their announcement.

IReality said it had always been prepared to recapitalise the firm.

This is despite a financial and operational review of LibertyOne conducted by iReality-appointed management which showed that LibertyOne would be unable to repay its debts even with the capital injection.

'IReality has always been prepared to honour its contractual obligations,' iReality said.

The independent directors of LibertyOne did not disagree with the financial and operational review, according to iReality. The same non-iReality directors of LibertyOne voted to appoint the voluntary administrator.

'We regret the decision that has been made by the board of LibertyOne but agree with their assessment of the company's financial insolvency position,' iReality said.

'Given our involvement, we are disappointed by the outcome.'

A spokesman for iReality declined to comment on what its preferred action for LibertyOne was following the completion of an operational review on Tuesday.

LibertyOne, in a second statement to the Australian exchange, said that it had appointed John Gibbons of accountancy firm Ernst & Young as its voluntary administrator.

IReality claims to generate and implement customised solutions for clients seeking to enhance shareholder value across the Asia-Pacific region.

IReality was founded by Matthew Burlage and Ravi Sarathy, who previously worked for investment bank Lehman Brothers.

When iReality invested in LibertyOne in October it said the main attraction was its Web integration services company, Zivo, which was described as the firm's key asset.



LibertyOne appoints voluntary administrator after firm fails to follow through on rescue package