Banks pull the plug on Commander: receivers called in UPDATE

Stuart Corner
Friday, 08 August 2008 06:38

IT Industry - Strategy

In addition, as part of the financing of the proposed restructure, the banking syndicate had agreed to re-schedule $7 million of the $10 million repayment due on 28 February 2008 to 31 October 2009.

McDonnell said: "They managed to sell a few parts of the business off but they did not progress very far with it and the ones they did sell did help them to reduce their debt levels, all it did was enable them to pay redundancies."

He added: "I give [CEO Amanda Lacaze] credit for turning what was an appalling situation - they burned through $100m in cash six months and she turned that into cashflow break even virtually from day one and I think there are very few people who have the ability to do that."

McDonnell said there would be no shortage of potential buyers for parts of the business. "I know of people who are interested in some parts of the business. I suspect various other IT and services companies will start making offers...the managed services part would be attractive." However he did not expect shareholders to see any significant return.

Commander had sounded a warning in June in a letter to shareholders when Lacaze said: "the financial year ended 30 June is expected to reflect significant abnormal activity affecting both EBITDA and NPAT performance." It forecast full year EBITDA to fall short of earlier guidance by between $4.5 m and $7m saying the shortfall was the result of "a more rapid decline in sales of stand alone IT hardware products and associated services than originally forecast." EBITDA contribution from hardware sales was expected to miss earlier guidance by $8.8m.

Its forecasting failures were compounded by the unavailability of accurate EBITDA data at the time: actual EBITDA performance in December 2007 and January 208 was $4.4m below the figure assumed at the time the guidance was issued.

Earlier, Commander had reported a net loss of $245m for the six months to 31 December 2007 including $193m in primarily non-cash impairment charges. However, the company said its directors were "confident that the turnaround plan announced on 30 January 2008 is achievable and will address the issues that led to the company's unsatisfactory performance in H1 FY2008." Revenue for the period was $245.7m down from $259.4m.