Gandalf?s profitable UK arm is set to disappear after a domestic management buyout was understood to have been ruled out by its Canadian parent.
The networking developer cut 180 staff last week and acknowledged the severity of its financial problems by seeking sanctuary under the Companies? Creditors Arrangement Act (CCAA).
The CCAA order suspends the claims of creditors until 31 October. Its purpose is to grant time to restructure and reorganise, preferably attracting additional funds or a buyer.
As part of a rescue operation, The Royal Bank of Canada has agreed to an interim credit facility on top of the existing lines of credit, which are near exhaustion.
Gandalf is looking for an investor to buy all or part of the company, but it appears to have few suitors. The Securities & Exchange Commission filing stated that no offers have been made to date, although the company has been looking for a white knight since February.
There was speculation that the UK subsidiary, running all European business except for the North American sector, made a management buyout offer that was refused.
Paul Beaumont, head of Gandalf?s EMEA business, refused to comment on the offer, but said: ?We [Europe] have our own boards but the UK is wholly owned by the Canadian company. Any offers would be considered by a combination of the North American and European management.?
Product and service revenues in North America were $26.1 million in 1997, down from $54.4 million in 1996. For the same period, European sales markets (UK, Holland and France) reported total revenues of $34.8 million in 1997 compared with $51.7 million the year before.
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