|Issue No 50||14 April 2000|
Packer, Pratt to Profit at Unions' Expense
Billionaires Richard Pratt and Kerry Packer are among the investors set to reap millions as Virtual Communities, the firm established to sell computers to union members, rushes towards a market float.
The company established by Steve Vizard has secured more than 20,000 orders and is is currently being valued at more than $360 million, but unions will only get the crumbs from these massive gains, according to NSW Labor Council secretary Michael Costa.
A series of gushing articles in the finance pages about the growing value of Virtual Communities in recent weeks has only highlighted the bad deal that the ACTU signed up last year.
Packer and Pratt are among a group of speculators who have injected $40 million extra into the VC coffers in return for a share of the company
Along with VC principals, they now stand to be the big winners when the company floats later this year, possibly as early as August.
While union delegates have been acting as workplace sales representatives and union journals have offered free advertising, the union movement stands to secure less than five per cent of the company's total equity.
And still unanswered is how the company will make e-commerce profits from the union membership base, including how personal data will be used.
"What is emerging is the thing we have argued from the start," Costa says, "and that is that the ACTU has seriously undervalued its asset."
"The value is not in the hardware, but in the network of users - and that network of union members is the asset which we have under-valued."
Costa has called on ACTU secretary Greg Combet to re-open negotiations with Virtual Communities and demand a greater share of equity
"The union movement is about to make some very rich people even richer," Costa says.
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Last Modified: 15 Nov 2005