Ebeon's chief executive Bill Donoghue was confident the company would be one of the top three e-business companies in the world by 2003. But what is the background to the sudden closure of Ebeon?

Ebeon was taking on new people, buying furniture and making plans for global domination just days before its collapse last week.

Ebeon's chief executive, Bill Donoghue, is not a man given to understatement. On several occasions over the past year, the head of the failed e-commerce company said that it would have revenues of $20 million this year and that it would be one of the top three e-business companies in the world by 2003. Over 1,000 people would be employed by 2003, he said.

Last Thursday, the company ceased trading after running up a £12 million debt, despite investment of over £20 million. More than 170 people lost their jobs.

Even as the company's employees were leaving, after being told their jobs were gone, new office furniture was being delivered to the company's offices in Sandyford, south Dublin.

Ebeon employees were told by Donoghue last week that they would not be paid for work done so far in January, although 104 employees at Ebeon's Dublin office were later accidentally automatically paid £250,000 in wages by AIB. It is not clear whether the bank will be able to retrieve its money. A spokesman for the bank refused to comment.

Informed sources said that the company had been spending cash at a very fast rate and had also invested heavily in recruitment, including a BMW giveaway for employees attracting new staff. Last year, it became the first company in Ireland to run recruitment advertising in cinemas.

The sources said shareholders wanted Ebeon to increase its services, but management at the company refused. It seems plans had been progressing accordingly when the company collapsed. There had been no reduction in services or staff or no squeeze put on the company by creditors, which made the collapse all the more sudden to all the parties.

Its main creditors are the Revenue Commissioners and a number of public relations and advertising agencies. An Ebeon source admitted that the company had gone through cash very quickly, but denied any mismanagement of funds. "The company was burning money at a huge rate, but it was necessary in the growth phase," he said. "It was all accounted for and all to an agreed plan."

However, one former employee said that the company had expanded way ahead of its requirements and had a high staff turnover because of employee dissatisfaction.

"It was not being run as a business, it was being run as a story," he said. "There was a perception that if the company had a lot of people working for it, it would be a successful company. The management was always weak on specifics."

A source close to the company said that the management had been "wrestling" with the lack of funds and imminent closure for about three weeks. The requirement for additional funding was originally mentioned last June, but the main shareholders -- Jonathan Mills, Norman Crowley and Robert Booth -- said that they did not have the money the company needed, the source said.

The three agreed to sell some of their stake in the company to Eircom under a convertible loan agreement in September and the funds were reinvested in the business. However, the issue of funds arose again in December and a source said that Eircom agreed in principle to put £5 million into the company. "As far as everyone was concerned they were putting up the money, but, at an Eircom board meeting before Christmas, they voted to put up the money only if it would be matched 50:50 by the B-shareholders."

Crowley, Mills and Booth are believed to have reiterated that they could not put up the money, but said that they would approach other possible investors. Over the Christmas period, the trio came up with "several investors", including a number of investment banks, who were willing to invest in Ebeon around the end of this month, according to the source.

"The investors met with Eircom to show that they were serious, but Eircom put it to a vote at the board meeting last Wednesday," he said.

"They voted not to put up money to bridge the gap until the funds came in and voted not to continue the business."

Sources at Ebeon said that they were annoyed that the company had been "strung along" by Eircom for over a month, while it could not afford to pay its staff.

Despite its 51 per cent shareholding in Ebeon and two non-executive seats on the company's board, Eircom had taken a back-seat in the running of the company. Representatives of Eircom were absent from major Ebeon events, including the announcement last year that it would change its name from Trinity Commerce and that it intended to seek an early stock market listing.

Eircom last week played down suggestions that the decision not to finance Ebeon further had been made by Eircom's new chief financial officer, Peter Lynch. "It was a shareholder decision from Eircom's point of view," a source said. "Eircom made a business decision."

Crowley, Mills and Booth are believed to have owned around 22 per cent of Ebeon before it went out of business last week.

Mills founded Mirador software, Crowley has invested in and heads up Vaspeon, while Booth owns about 50 per cent of Trinity Technology.

Mills and Crowley also recently launched a wireless technology company called Poptext. There are also believed to be a couple of smaller investors in Ebeon, including Peter Crawford and Manno Ryan, the brother of broadcaster, Gerry Ryan.

The company's chief executive, 35-year-old Donoghue, could not be contacted for comment last week. Donoghue joined the company in 1998 when it had only six employees and has been seen as a driver of its rapid expansion and ambitious global plans.

Previously he was a supermarket manager with Quinnsworth and later Tesco, and was the group's youngest store manager at the age of 21. In 1990, he was appointed IT controller of Quinnsworth when it was carrying out a major revamp of its back office systems.

When Tesco took over Quinnsworth, he was approached by Booth and Mills who had built up Trinity Technology as a hardware business, but had decided to form Trinity Commerce to get into the internet space. It clients have included AIB, NCB Stockbrokers, Eircell, Tesco, Dunnes Stores, the VHI and Bank of Ireland.

Late last year, the company entered a £5 million global joint venture with Edelman Interactive Solutions to develop internet business applications and solutions.

It has also made recent high level appointments, including a head of research and planning and a corporate communications manager. Only last week the company named Rachid Bengougan as its 'chief people officer'.

With job losses announced last week at Oniva, the Dublin-based e-business consultants, and Softco, e-business software firm, and the scaling back of Fyffes internet portal, Worldoffruit, the future doesn't look bright for technology firms as the level of funding from banks and venture capital continues to dry up.

Eircom's many multimedia pies

Indigo Group

Indigo Group, the company's internet service provider arm, is 100 per cent owned by Eircom. It is comprised of the Indigo online shopping site and the Eircom.net home and business portal. Together the two sites had more than 260,000 subscribers at the end of last year, although industry analysts say it is not clear how active these users are. According to technology analysts, the numbers of new subscribers began to fall off at the end of last year.

Nua

Although it is reported to be laying off one third of its staff, Nua was named by Fortune magazine as one of the top ten web developers in the world. Nua was set up in 1995 and since then has built up a strong reputation as a leading internet software development company.

Although analysts consider the company, which is 20 per cent owned by Eircom, to be pretty sturdy, they say that like other internet consultancy firms it is coming under increasing pressure from the tightening dotcom market.

Local Ireland

Devised more than two years ago by Nua, Local Ireland is 86 per cent owned by Eircom and is involved in online information systems development. The Local Ireland website provides information on Ireland generally and provides links to local county and town web-sites.

Golden Pages

Generally thought of as the most valuable asset of Eircom's subsidiary businesses, the recently relaunched GoldenPages.iewebsite is an online version of the well known directory.

The Golden Pages had revenues in the first half of this year of 31 million and is thought to be extremely profitable.

Accuris

Accuris is 50 per cent owned by Eircom and 50 per cent owned by Dutch telecom company KPN. It provides telecoms software solutions to fixed line, mobile and internet service providers.

Altion TI

Established by Eircom and Aldiscon in 1996, the company was renamed Altion in August 1999. It is 33 per cent owned by Eircom. Altion is in the area of network capacity management, administration and circuit assignment. It has 80 employees and operates in Europe and Asia.

Flexicom Limited

Flexicom is a multi-currency card processing solutions business and is 30 per cent owned by Eircom. The company competes in a similar market to Trintech, although analysts say Flexicom is not as successful as Trintech.

Beacon Integrated Solutions

In October 2000, Eircom paid euro1.3 million for a 49 per cent stake in Beacon Integrated Solutions (BIS). BIS is the consulting arm of a German software systems integration company called SAP.

Onemade

Last March, Eircom paid e5 million for a one fifth share in Onemade. Onemade is an online arts and crafts auction service based in the US, but which has expansion plans for Ireland and Britain. When the Irish and British operations come online, Eircom will have a 50 per cent stake in them.

Broadcom

Founded in 1987, the company is a joint venture between Eircom, Ericsson and Trinity College Dublin. Eircom has a 45 per cent holding. The company reported revenue of e4.5 million in 1999 with a staff of 60. It undertakes information technology and telecommunications research and development projects.

Viasec

Viasec is a manufacturer of internet security solutions with offices in Europe and the US. Eircom has a 30 per cent stake in Viasec.