[LINK] Telco surrenders to receivers

[Bernard Robertson-Dunn]

<brd>
Quite an irony here. The Department of Finance was strongly in favour of 
government outsourcing. Now one of its suppliers has gone under.

Whether it is because of, or in spite of, government patronage I 
wouldn't like to say.
</brd>

Telco surrenders to receivers
Mahesh Sharma
August 11, 2008
The Australian
http://www.australianit.news.com.au/story/0,24897,24160043-15306,00.html

ONLY eight months after a management overhaul, junior telecoms group 
Commander Communications has been placed in receivership as its bankers 
race to recoup more than $300 million that was poured into the group.

The move ends 12 months of uncertainty around the former Telstra 
subsidiary, including a failed sale of the business and the sacking of 
its senior management team last December.

Hours after the group's board tipped Commander into voluntary 
administration on Thursday night Commonwealth Bank, Westpac and National 
Australia Bank called in receivers McGrathNicol to take control of the 
company's assets and data-to-day operations. But the banks are unlikely 
to recoup their investment from Commander's largely hollowed-out assets, 
according to Ferrier Hodgson partner Max Donnelly.

"It appears the bank's debt will not be paid from the sale of the 
assets," said Mr Donnelly, who acts for the administrator.

"The banks will suffer a substantial deficiency and therefore there's no 
chance of creditors getting a dividend. Hence shareholders will not have 
any likelihood of a return."

Uncertainty hangs over Commander's 1300 employees who were briefed by 
the receivers yesterday where employee entitlements weren't guaranteed.

In an internal email obtained by The Australian, CEO Amanda Lacaze told 
staff that Commander had been negotiating its debt facility with its 
banks over the past three months.

Ms Lacaze, a former AOL-7 chief executive, took over last year after 
Adrian Coote resigned as Commander's problems mounted. Mr Coote was 
replaced by one-time AOL-7 chief executive Amanda Lacaze and former 
Telstra executive Shane Allan

Earlier this year, Commander's debt blew out to $335 million but Ms 
Lacaze convinced the banks to delay a $115 million repayment due on 
October 31 this year until 2009 on the condition it executed on a 
company restructure.

But Commander could not complete a planned asset sale and slashed its 
profit guidance by over $15 million to about $4 million, and more 
recently faced retrenching up to 120 staff after being forced to 
relocate its call centre operations to Adelaide.

The restructure was prompted by the plunge in its share price last year 
from $2.75 to 20c and the management clean-out at the end of the year.

McGrathNicol said it would continue to trade Commander on a ``business 
as usual basis'' whilst sales of the various businesses are pursued. 
``There are no plans for major structural changes to the business while 
the sale process is underway,'' McGrathNicol partner Peter Anderson said.

The first creditors' meeting will be held on Tuesday, August 19.

Ms Lacaze wrote that the executive team "right up until yesterday 
morning" were "still hopeful that we could craft a solution that would 
meet with the approval of the banks".

The board recently voted to retain Ms Lacaze as CEO to the tune of 
$750,000 a year, with a retention bonus of $375,000 to be paid on 
September 1.

She said that the Commander's board and management had failed to execute 
on its restructure plan initiated at the start of the year. "Time was 
against us -- despite everyone's best efforts we just couldn't get 
enough of the turnaround happening fast enough.

"But we did give it a RED HOT GO! I did also say that whilst there were 
no guarantees of success, that you had my 100 per cent commitment and 
that of the whole executive team, that if we didn't get there it 
wouldn't be from lack of hard work."

Commander's customers include the Department of Finance and 
Deregulation, the Australian Communications and Media Authority, and 
over 30,000 small to medium businesses.

-- 
 
Regards
brd

Bernard Robertson-Dunn
Canberra Australia
brd at iimetro.com.au