BlueFreeway launches investigation into its own accounts

Digital media company BlueFreeway has gone into an indefinite trading as the beleaguered company investigates its own financial position. The company said in a statement this investigation is expected to take up to two weeks.

BlueFreeway requested a trading halt on 5 May pending the release of an update to the market on its financial results for 2007-08. But the company now says that as a result of recent restructuring, it will need to “undertake further investigation” before it can provide guidance on the profit outlook. In March, BlueFreeway flagged a loss of $4.5 million for 2007-08, but this may now be higher.

The latest news comes after a tumultuous few months for BlueFreeway, which is essentially a portfolio of 25 separate businesses. The company lost $4 million in the six months to 31 December 2007 as head office costs blew out – hardly a surprise given the company spent almost $30 million on a string of acquisitions during the period and hired 28 new executives across six countries during the period.

The cost blowout cost chief executive and co-founder Richard Webb his job, and sparked a corporate restructuring led by PricewaterhouseCoopers, with sales personnel, professional fees, corporate and travel costs all under review.

Despite the bad news, BlueFreeway co-founder and interim executive chairman Greg Daniel told investors in early March that the business is performing well. “Notwithstanding all of this, the performance of our portfolio companies is forecast to be significant. The portfolio companies have performed strongly and will continue to benefit from the ongoing trend of marketers to migrate an increasing proportion of their budgets to digital and interactive media.”

Daniel also reported in March that he had received interest from a number of parties interested in acquiring the company, but it is unclear whether these negotiations have progressed.

BlueFreeway has received strong support from at least one quarter this year, with the Hannan family’s Independent Print Media Group increasing its stake in the company to 19.9% in April.

BlueFreeway and IPMG chief executive Michael Hannan did not return calls.