Compel snaps up ailing Info'P for bargain price
Struggling UK reseller thrown a lifeline after revealing loss of #7.4 million.
Compel has strengthened its position as the second largest UK of #7.4 million. corporate reseller after revealing its intention to acquire troubled Info'Products for #10 million.
The purchaser will pay #1 and assume #10 million for Info'Products total liabilities. Info'Products' net assets were estimated to be #28 million.
Compel will raise #3 million with an equity placing.
Neville Davis, chairman and chief executive of Compel, said: 'The attraction of this purchase is that we have bought it for less than its assets. This gives us a buffer to turn the business around.'
As exclusively revealed in PC Dealer (29 April), the first indication of the extent of the reseller's problems came when it emerged that accounting discrepancies over the past two years had resulted in a loss of at least #10 million.
In a statement issued this week, it was confirmed that Info'Products became loss-making in 1997. Latest estimates showed it was making a #7.4 million loss and turnover of #93.3 million in the seven months ended 31 July.
Davis claimed Compel was confident it could turn around the reseller's fortunes, giving it direction and focus it had lacked under its previous management.
But to stem the week-on-week loss, there will be job cuts. The previous management was launching a redundancy programme that will continue under Compel. John Lowry, brought in as managing director in August to evaluate the company's situation, will leave. Sales director Dave Elliott will also depart during the next six months.
Info'Products will be renamed Compel IP. It will be run as a separate subsidiary until it stops haemorrhaging money and will be integrated into Compel in about six months. Former director John Kemp will rejoin Compel to ensure the integration of Info'Products.
The sale of the UK arm will see Info'Products retrench its business into France and the Netherlands.
A TURBULENT YEAR FOR INFO'PRODUCTS
February - Managing director John Trueman, finance director Scott Pheby and sales director Andrew Douglas walk out after management overhaul.
Reseller admits it did not realise expected business following the Simmons Magee acquisition in March 1997. Speculation grows about loss for 1997 financial year.
April - PC Dealer uncovers losses of at least #10 million over two years.
Reseller moves to outsource customer services.
May - GE Capital's interest in buying reseller emerges. Owner KNP BT refuses cash injection.
July - Info'Products loses Citibank contract to Computacenter. Howard Dickel, director of business development, resigns. Alan White, head of strategy and supply, joins Ingram Micro as purchasing director.
August - Sales director Norman Kough joins ICL Multivendor Consulting.
Interim managing director Huib Winkel relinquishes post, to be replaced by ex-Texas Instruments' John Lowry.
October - Project management boss Richard Hazel quits.
November - Info'Products delays filing its annual accounts until 1999 - the second delay it has requested in a year.