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Energis Freeserve reward less than expected

Dixons drives hard bargain

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Dixons has struck a hard bargain with Energis, the telco that supplies Freeserve with all its Internet infrastructure needs. Through its Planet Online subsidiary, Energis gets 1.75 per cent of the enlarged share capital of Freeserve -- in contrast with earlier reports which said it would have as much as three per cent of the equity. Even these shares come with a price attached. Admittedly this price is highly subsidised -- as Energis must stump up for the nominal value for Freeserve shares. This won't be that much, but we can't tell you yet how much Energis is paying, as Dixons has not yet revealed what the nominal value of Freeserve shares will be. Energis can also subscribe for up to two per cent of Freeserve's share capital, in equal tranches over the next four years. In effect, this is a massive share option, with the price the same as that payable by investors in the IPO. That's the carrot. The stick is that Energis has to meet "certain conditions", including performance criteria. ®

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