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Investor criticises chiefs of lossmaking Gloo for pocketing millions

WT24 Desk

An activist investor has criticised the management of Gloo Networks – the listed vehicle that aimed to buy digitally focused media companies valued up to £1bn but is shutting up shop – for pocketing millions in salaries and bonus payouts despite failing to strike a single deal in three years, The Guardian reports.

Gloo Networks, which is chaired by Vivendi’s chief executive, Arnaud de Puyfontaine, has put itself into voluntary liquidation after burning through the majority of the £30m raised when it listed on London’s AIM share index in 2015.

The company, which is run by Rebecca Miskin, the former digital strategy director and “change agent” at Cosmopolitan’s publisher Hearst Magazines UK, spent millions reviewing 90 potential assets and had “in-depth discussions” with 11 but admitted in March that it was giving up on a takeover of its latest potential target.

However, the company’s top executives – who included Juan Lopez-Valcarcel, the former digital chief of Pearson, the former owner of the Financial Times and the world’s largest educational publisher – also proved to be a significant drain on its resources.

Gloo paid out just over £4m in salaries and benefits, including more than £1m in bonuses over two years, to top management from the time it was incorporated until 31 March last year, according to the most recent publicly available accounts.

“The politest word I can think of for paying yourselves bonuses of £750,000 in one year from a lossmaking cash shell is that it is unprecedented,” said Richard Bernstein, the founder of the AIM-listed activist fund Crystal Amber. “There shouldn’t be any bonuses paid for not actually delivering a deal. It looks like almost every director got one and it seems they got it on two criteria, breathing in and breathing out.”

Bernstein, who bought an 8% stake in Gloo in a personal capacity, had called for an end to the excess. He was critical of the rapid cash burn rate of the company, which saw it plummet from £21m at the end of September to “between £12m and £14m” at the end of March.

“The board has conducted a strategic review of the current pipeline of potential acquisitions within our target sectors that demonstrate the requisite financial characteristics,” said De Puyfontaine, a former chief executive of Hearst UK. “Given the likely time frame to a possible acquisition, the board concluded that shareholders would be best served through the return of Gloo’s remaining capital.”

Crystal Amber has a track record of shaking up companies, having taken stakes in the James Bond studio Pinewood, subsequently calling for its chairman Lord Grade to step down, and in the regional newspaper publisher Johnston Press, where the fund wanted the chief executive Ashley Highfield out.

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