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Social travel network WAYN was rescued from insolvency by lastminute.com group after the Swiss-based company agreed to acquire its assets for a mere $1.2 million (£1 million) in a controversial “pre-pack” deal.
Over the course of its 14-year history, WAYN had raised $11 million from investors so the $1.2 million payday did not please many investors. A pre-pack purchase is common in the UK and is controversial because the buyer doesn’t have to take on the company’s debts or onerous contracts.
WAYN and lastminute.com group didn’t provide any of these deal terms when they confirmed the acquisition last month but subsequently Skift found some of the fine print in the administrators’ report.
According to the report, Lastminute.com group submitted its initial offer to acquire WAYN on June 2 and it totalled $2.8 million (£2.3 million) but the company eventually reduced its bid to $1.2 million (£1 million) after it carried out due diligence. Match.com, owned by Barry Diller’s IAC, submitted a bid for WAYN for $122,000 (£100,000) but it was eventually rejected.
WAYN accepted the lastminute.com group bid but the final selling price was not sufficient to pay-off all creditors, and Where Are You Now? Ltd was put into administration.
The list of those still owed money includes Brent Hoberman, the co-founder of lastminute.com, who was a minority shareholder in WAYN.
Administrators FRP Advisory’s report details WAYN’s financial problems — which WAYN’s directors previously denied to the press — and included the details about the acquisition.
It shows, among other things, that Where Are You Now? Ltd:
- Did not have sufficient funds required to meet payroll at the end of August
- Made significant losses in both its most recent financial years
- Attempted to launch a hotel booking website called Where Next?
- Targeted more than 150 companies in an attempt to sell the business
- Left creditors and other companies out of pocket by almost $1.8 million (£1.5 million)
- Was losing website traffic at a rate of 5 percent a month
Money to Burn
On September 20, lastminute.com group released a press release announcing that it had acquired WAYN. It did not reveal the cost of the deal but did contain laudatory quotes from a senior member of the company as well as Peter Ward, the co-founder and CEO of WAYN.
What the press release didn’t contain was the full story of what had been happening at WAYN in the run-up to the deal and the perilous state the company had found itself in.
The administrator’s proposals – a document compiled during insolvency proceedings in the UK – painted a picture of a company struggling to survive.
WAYN was launched in 2002 before Facebook and before Twitter. During its lifetime it pursued a number of different strategies. In its most recent financial year, which ended on September 30, 2015, WAYN registered a $797,000 (£652,392) loss on turnover (or revenue) of $1.1 million (£884,355). Its losses, carried forward at the end of the year, stood at $5 million (£4.1 million), indicating that the company had been struggling for some time.
Even with mounting losses a company can continue to function as long as it has cash available. This wasn’t the case with WAYN, which according to the administrators: “did not have sufficient funds to meet the payroll due on 26 August 2016 or to meet payments to critical suppliers, which were dated at the end of August 2016.”
Despite raising more than $11 million since its inception the company’s money problems in early 2015 led it to seek further working capital with a total of $415,000 (£340,000) being raised.
However, WAYN needed more money by the summer and it struck a deal with Glasgow-based Scottish Equity Partners. During its involvement with WAYN, SEP ploughed in a total of $1.8 million (£1.5 million). The sale to lastminute.com group saw it paid back only $768,000 (£628,500)
Before WAYN’s assets were eventually sold to lastminute.com group, more than 150 potential investors had been identified with the likes of Emirates-owned Dnata and Avios expressing a tentative interest in acquiring it, according to the report.
The process lasted from late 2014 until the sale with a brief hiatus when the company attempted to launch its own hotel booking platform called Where Next?
Skift put a series of questions about the demise of WAYN to its former directors as well as new owner lastminute.com group.
A spokesperson declined to comment on a number of areas but said that the motivating factor behind the deal was WAYN’s database of 20 million registered members as well as its 2 million monthly unique visitors.
The lastminute.com group spokesperson said it would be “integrated with lastminute.com group’s new media business, the ‘Travel People.’ Its business complements and expands our offering in Europe and, with its strong social travel network platform, it will become the content hub for our entire proposition.”