Baltimore to sell core internet business

Baltimore, the Irish technology company that was once valued at £7.5 billion sterling (€10.8 billion), is to sell its core internet security business for £5 million.

The London and NASDAQ-quoted company announced yesterday that it had agreed to sell its Irish-based public key infrastructure (PKI) division to US company, beTRUSTed, for £5 million. The business developed internet security software, and was Baltimore's core operation.

Shareholders will vote on the deal at an extraordinary general meeting (egm) in mid-November. The vote will end a piecemeal sell-off of Baltimore's businesses that will net £20.9 million for the group.

BeTRUSTed will also take on some non-cash liabilities related to licensing and service contracts. In a research note yesterday, Goodbody Stockbrokers' analyst, Mr Gerry Hennigan, valued these at £15 million. He said an estimated £10 million of this was accounted for by an agreement to provide Baltimore Japan (BTJ) with technology for the next eight years. This was agreed after the Irish group sold BTJ to venture capitalist group CGI in 2001.

The group employs 255 people, 100 of them in the Republic, working mainly in the PKI business. They will transfer to beTRUSTed, which will continue to operate in Ireland. Most of the remainder are based in the UK. A company statement said that most staff not transferring to beTRUSTed would be laid off. A spokesman said the company was not in a position to specify how many workers faced redundancy.

The PKI division made a pre-tax loss last year of £11.1 million on sales of £19.3 million, according to unaudited management information.

Baltimore chief executive, Mr Bijan Khezri, said the company would keep the Baltimore brand. He said the sale of its operations, combined with its cash balances, would leave the remaining shell company with over £30 million in cash.

Mr Khezri said it would have have liabilities of between £1 million and £2 million for redundancies, and between £2 million and £7 million in leasing and property charges. He added that its properties were being sublet.

He said the board would examine the company's options, which could include investing its cash in a new project or returning the money to the shareholders.

"We will have an egm in the second half of November and present the shareholders with options that they can vote on," he said. "They will have the final word."

Baltimore appointed JP Morgan to help it find a buyer last May. It aborted the sale process in July, and opted instead for a piecemeal sell-off of its various divisions. BeTRUSTed purchased the bulk of the business.

The £20.9 million valuation is a far cry from the highs which Baltimore Technologies hit during the first quarter of 2000.

In February of that year, its price closed at an all-time peak of £13.75, having traded as high as £15. The closing price valued the group at £7.5 billion, and paved the way for its entry to the benchmark FTSE top 100 index.

Its price began heading south as the technology bubble deflated through the second half of 2000. Two profit warnings in the first six months of 2001 accelerated this.

Its high-profile chief executive, Mr Fran Rooney resigned the following July. By January 2002, it was trading at 19 pence sterling. In May, it was valued at £13 million.