Managing director leads quest to bolster Interquad rescue

Distribution Financial owner Intelligent Systems reveals £1 million drop for staff expenses.

Interquad's attempts to lay its financial problems to rest have been1 million drop for staff expenses. bolstered by a cash injection by individual investors, including the distributor's own managing director, Ed Arnett.

Arnett stated: 'I am in the process of adjusting some of the shareholding and pulling money in. This could be used for acquisitions or for geographic expansion.'

He revealed he was given an option to buy into the distributor when he joined in February - a deal which is currently being concluded - and has also been courting banks for additional investment capital.

However, Arnett refused to say how much money he had invested in the company.

The distributor experienced a series of job losses in recent months, including the departure of commercial director Neil Basset and a number of sales executives after results for 1996 revealed a 77 per cent drop in profits.

US-based venture capitalist Intelligent Systems, which owns Interquad, stated that a loss of £1 million in the financial company's results for the year ended 31 December 1997, was related to the distributor, specifically for contract personnel expense and cost overruns due to fitting out a new facility.

The announcement of Arnett's personal investment in the distributor sparked speculation that he was about to mount a management buyout (MBO).

One source commented: 'Technically an MBO is when an existing director invests in a company he doesn't own; with the numbers down, value decreases and a director can buy in at rock bottom prices.' But Arnett disputed suggestions of an MBO. 'Intelligent Systems felt the company was not reaching its full potential but now think there is a lot of room for growth,' he said.

However, an industry source said the parent company had been looking to get rid of Interquad for more than two years because of the consistent losses incurred by the company. 'It is a perfect time to sell it off,' he said.

Arnett claimed: 'This is a perfect opportunity to make money out of the company because the value of Interquad will be what I make it.'