Commander to shed 600 staff and 'non-core' businesses

Stuart Corner
Wednesday, 30 January 2008 14:20

IT Industry - Strategy

A number of profitable businesses that have been assessed as non-core to continuing operation are also on the block and the company says the data room process undertaken in late 2007 "has been most helpful in identifying and qualifying market interest in these assets."

The headcount reduction is expected to result in annualised cost savings of approximately $65 million. The cash cost of this reduction will be approximately $17 million which will be funded within existing bank facilities. Commander expects to be cash flow positive from January 2008 excluding restructuring charges.

Commander has currently drawn down $335 million of its debt facility, excluding bank guarantees and letters of credit. Its banking syndicate has agreed, subject to documentation, to amend the debt repayment schedule by rescheduling the $115 million 31 October 2008 facility repayment to 31 October 2009. In addition, as part of the financing of the proposed restructure, the banking syndicate has agreed to re-schedule $7 million of the $10 million repayment due on 28 February 2008 to 31 October 2009.

Commander is required to suspend dividend payments and not to make any capital distributions until the debt facility reduces to $250 million, excluding bank guarantees and letters of credit. The company will provide further details when it announces its half yearly results at the end of February.

It is currently expected that FY08 EBITDA before abnormals, such as impairment of carrying value of assets and restructuring charges, is likely to be in the range of $20m to $30m.