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Commander Break-Up Begins |
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Written by Adam Gosling
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Monday, 04 February 2008 |
Efforts to rescue the disastrous share price at Commander
Communications have begun in earnest with the company's marketing-oriented CEO announcing to the Stock Exchange that the first thing she
has sold is the company's wholesale network services subsidiary, Unitel
Australia to M2 Telecommunications.
Shares in the ASX-listed company tanked after it was revealed the
hostile take-over of Volante Corporation has failed at an operational
level leading to the departure of company CEO Adrian Coote, efforts to
sell the business and a new plan to find cash to pay back the money
loaned by the banks to fund the takeover.
Unitel supplies wholesale telecommunications services including fixed
line, mobile and data services. Ironically, the buyer is the same
company that acquired the last business managed by new Commander CEO,
Amanda Lacaze.
Speaking of this sale, Lacaze revealed this was only the first of
several, saying the company plans to divest itself of non-core assets.
This urgency to reduce debt seems out of kilter with the operational
problems blamed for the end of fiscal disaster last June and is despite
Chairman Elizabeth Nosworthy initial statements that there would be no
break up of the business when no interested parties arose for the
entire company following last years' 'data room' exercise.
In a statement to the ASX and shareholders last November, Nosworthy
said outright that the company was highly-leveraged and it was
"desirable" to pay down some of that debt. The proceeds of the Unitel
sale to M2 will be used to reduce bank facilities, the company said in
a statement.
The transaction, which is expected to close on 22 February, prices
Unitel at about A$10 million plus a performance based component worth
up to A$2.5 million over the next 36 months. It did not include
Unitel's Australian distribution rights and associated inventories for
Polycom, have been excluded from the deal.
Under terms of the agreement Commander will continue to resell the
Unitel services for a period of up to three years. "I am also delighted
M2 will operate Unitel as a continuing business under an ongoing
wholesale agreement with Commander. This transaction will not only
benefit Commander's balance sheet, it will also provide recurring
network revenue, consistent with our turnaround strategy," said Lacaze.
Commenting on the announcement, Vaughan Bowen, Managing Director/CEO of
M2 Telecommunications said: "We first approached Commander about Unitel
during the Data Room process and are very pleased to have reached an
agreement that provides continuity of services as well as substantial
growth opportunities for Unitel's customers and staff. We believe
Unitel is the ideal business to round out our wholesale product suite."
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