Woosh writes down assets by $5.9m in sale to Craig Wireless

BUSINESSDESK: Woosh Wireless, the local wireless internet service provider, wrote down the value of its assets by $5.9 million in its sale to Californian telecommunications company Craig Wireless.

The Auckland-based company was sold to Craig for $US5.5 million last year in a deal that was structured to satisfy $20.6 million of debt owed to then-investor Kuwait Finance House.

Woosh's financial statements show a loss of $2.9 million in the year ended June 30, 2011, which the company blames on one-off items including the impairment it wore on the sale to Craig - a $2.6 million insurance bill for earthquake damage to its Christchurch network and a $1.8 million foreign exchange gain.

"The telecommunications market remains challenging to say the least, and while Woosh business has made good progress in recent years in largely eliminating its trading losses, significant further investment is required," chairman Rod Inglis said in his report.

"The Craig Wireless transaction was considered the best way forward for the business."

Woosh made an operating loss of $477,000 in the latest year on sales of $18.3 million, which it attributed to rising network direct costs.

The statements were prepared on the basis that the business would cease trading, with its assets transferred to a new entity. That restructure caused the delay in the finalisation of the audited accounts, which were signed off on June 25 this year.

Since its incorporation in 1999, Woosh has accumulated losses of some $182.1 million, with negative equity of $14 million.

Toronto Stock Exchange-listed Craig Wireless valued Woosh's net assets at $C7.6 million at the time of the transaction. The company owns a 51% stake in Woosh through its interest in a holding company of which Mr Ingles holds the rest.

At the time of the acquisition, Craig Wireless valued the non-controlling interest in Woosh's net assets at $C980,000.

As at May 31, Craig Wireless' $C8.2 million of New Zealand non-current assets made up more than a third of its total property, equipment, intangible assets and acquisitions, according to the company's latest quarterly financial statements.

Woosh has made up the bulk of Craig Wireless' sales since its takeover, with New Zealand revenue of $C7.7 million in the nine months ended May 31 out of total sales of $C7.8 million.

Craig Wireless posted a net loss of $C9.4 million, or 17 Canadian cents per share, in the nine-month period, compared to a loss of $C7.7 million, or 15 cents per share, a year earlier.

The TSX-listed stock has dropped 21% this year, closing at 13 Canadian cents per share yesterday. That values the company at about $C6.2 million.