Payzone may be set to sell European divisions

DUBLIN-BASED electronic payments group Payzone is believed to be preparing to sell its divisions in Spain, France, Italy, Poland and Romania in a bid to streamline the company's continental European operations and raise cash for the group.

It is understood the troubled company, listed in London, could net up to €50 million from the sales. All of these businesses are involved in the supply and maintenance of electronic payment terminals and the resale of mobile phone minutes.

Payzone's recently installed chief executive Mike Maloney is thought to want to focus the group's operations on its main markets of Ireland, the UK and Germany. It is understood he is prepared to offload a number of continental European divisions to raise cash. The company operates in 21 countries across Europe.

Informed sources suggested that Paris-based Proximania, a distributor of prepaid telephone cards, has expressed an interest in acquiring Payzone's Spanish, French and Italian arms.

These are thought to be worth €15 to €20 million.

Its Polish and Romanian businesses are thought to be worth about €30 million.

Payzone has experienced difficult trading since it was formed last December through the merger of electronic payments group Alphyra in Ireland and UK ATM operator Cardpoint.

In March, the company dismissed its chief executive and Alphyra founder John Nagle and finance chief John Williamson. Mr Nagle is involved in litigation with Payzone. This followed a bitter dispute between the pair and Payzone's then chairman Bob Thian. Mr Thian has also left the business.

In June, Payzone reported an operating loss of €152.9 million for the six months to the end of March 2008. When finance costs and losses incurred by associates were included, Payzone's loss increased to €166.4 million.

Payzone's revenue during the period was €449 million. It raised €40 million through an equity placing and drew down €291 million from Royal Bank of Scotland to refinance its debt. At the time of the results, chairman Peter Smyth said the company was now on a "firm financial footing".

Its share price closed unchanged at 12 pence in London yesterday. It traded at just over 70 pence at the time of the merger last December.