CHS weighs up funding options

Distributor dismisses share issue as means of raising extra capital

CHS Electronics is looking at various options to raise cash in an attempt to turn round its fortunes and distance itself from recent financial troubles that saw some vendors suspending its normal credit terms.

The distributor?s cash flow problems were highlighted when it had to settle a High Court writ for #70,755 with D-Link (PC Dealer, 7 May).

Craig Toll, CHS chief financial officer, admitted to PC Dealer that the company was in discussions to raise funds but refused to say how that would be achieved.

?If you look at our balance sheet, we need more money. When you are in a growing market, you need to invest in your working capital. You need capital to invest in working capital.?

He said CHS could consider changing its bank facilities or altering its long-term debt structure to reduce its repayment schedules. But he denied that the company had decided to go for a share issue in an attempt to raise the money.

Toll was not prepared to say how much CHS needed to raise, but he did say the cash injection would enable the distributor to make more acquisitions, as it would be able to pay cash for companies that did not want stock options. He added that CHS UK was one of the most heavily capitalised subsidiaries but refused to comment on whether it was profitable.

The proposed cash injection has increased speculation that CHS is nearer to concluding a deal with Karma International. It emerged last month that CHS was hotly tipped to pick up the PC components distributor after Karma admitted it was up for sale (PC Dealer, 30 April). Sources claimed a deal would go through in July. Toll refused to comment on the Karma deal.