Optus ditches Strathfield Group

Stuart Corner
Monday, 12 December 2011 15:57

IT Industry - Listed Tech

Mobile phone dealership, Strathfield Group (ASX: SRA) - currently in voluntary administration - has revealed that Optus terminated its dealership arrangement last month, after 11 years.

Strathfield did not notify the market of the development at the time but in a statement to the ASX today, Strathfield said: "Optus notified the administrators and the company on Friday 18 November 2011 that it had terminated the master dealership agreement with immediate effect. This was despite Strathfield providing, on Optus' request, what it considered a realistic and achievable forward plan to Optus."

Strathfield said that Optus had claimed that its agreement gave it the right of termination in the event of any act of insolvency.

It added: "The board was extremely disappointed with the actions taken by Optus, in particular when Optus has benefitted for approximately 11 years from the exclusive arrangement it has had with Strathfield, during which period Strathfield has connected hundreds of thousands of customers to the Optus network."

The company also announced that a meeting of creditors held on 21 November had approved a deed of company arrangement (DOCA) returning control of the company from the administrators to the directors and management and that the deed had been executed on 1 December.

It added: "The DOCA includes a deed fund of approximately $650,000 which will be applied in the first instance to cover the administrators' costs, with the balance applied to employees as priority creditors and any remaining amounts to unsecured creditors. The deed funds are to be provided by the secured creditor, who has agreed not to participate in any distribution."

The announcement ended on a bullish note saying that, despite the loss of the Optus dealership, the DOCA "provides an opportunity for the company to go forward with little or no external debt on its balance sheet and] may enable the company to seek fresh capital or complementary businesses to acquire."

Strathfield announced on 3 October its intention to restructure, following its reporting of a $12.4m loss for the year to 30 June 2011. It said the decision had been taken on the basis that the board felt it could no longer accept the offer of funding support from its largest secured creditor.

Since then it said: "The board has been in earnest negotiations, meetings and correspondence with its largest supplier and its secured creditor about the proposed restructure, in order to ensure their support and in particular maintain the continuity of supply of telephony products and services. The board has also been in discussions with two potential investors who had approached the company about participating in recapitalisation of the company following any restructure."