Banks pull the plug on Commander: receivers called in UPDATE

Stuart Corner
Friday, 08 August 2008 06:38

IT Industry - Strategy

Commander Communications (ASX: CDR) has been placed into receivership by administrators called in after the company's bankers refused to extend loan repayment facilities.
The company announced this morning (8 August) that it had appointed Steve Sherman and Max Donnelly of Ferrier Hodgson as joint voluntary administrators "following a decision by the company's lenders not to grant a further extension of time for repayment of their facilities."

Within hours Peter Anderson, Chris Honey and Joseph Hayes of McGrathNicol announced that they had been called in by the administrators as receivers and managers. They said they would continue to trade on a business as usual basis whilst pursuing sales of the various arms of the Commander business.

"It is the receivers' intention that all current Commander services will continue uninterrupted whilst the sale process is undertaken, and that all Commander customer needs continue to be serviced. There are no plans for major structural changes to the business while the sale process is underway,: they said in a statement.

Commander's failure comes despite efforts to restructure the company under CEO Amanda Lacaze, brought in at the end of 2007 with the company drowning in debt and burning cash.

Commander got into trouble following its 2006 acquisition of Volante and attempts to restructure is channel system into franchises. BBY analyst, Mark McDonnell, suggested that Commander had "basically bet the house on their ability to cross-sell [communications products and services] on the back of Volante [IT service offerings]."

Commander tried, unsuccessfully, to find a buyer in late 2007 Optus, AAPT and Dimension Data were all named as potential buyers. Then at the end of 2007, long time CEO Adrian Coote resigned and Lacaze was brought in and set out shedding staff and selling none-core businesses in a bid to get the company back on track.

In January 2008 she announced a major restructuring plan . In that announcement  the company said it had drawn down $335 million of its debt facility, excluding bank guarantees and letters of credit and that its banking syndicate had agreed to amend the debt repayment schedule by rescheduling the $115 million 31 October 2008 facility repayment to 31 October 2009.
CONTINUED