UK online information services provider The Dialog Corporation Plc, is still struggling under the burden of debt, and has yet to announce its strategy to free up funds for development of its e-commerce business. When the London Stock Exchange and Nasdaq-listed firm announced its first-quarter results Friday, it revealed it had spent over 10% of its revenues on interest repayments.
The company still owes 143m pounds ($228.9) due to its overly ambitious 300-pound ($488.5m) acquisition of Knight-Ridder Information Inc’s business in 1997. Dialog paid out 4.5m pounds ($7.2m) this quarter on interest repayments, on revenue of 42.7m pounds ($68.3m). Despite this, the firm made a profit, reporting net income of 512,000 pounds ($819,600m).
A week earlier, Dialog announced a debt-structuring program to alleviate its heavy repayment schedule and interest payments. A $25m loan from Chase Manhattan Bank, the original acquisition debt arranger, repayable by October 2002, was injected into its debt facility as part of an effort to free up funds for investment in its e-commerce activities. The group said it was involved in further strategic initiatives to substantially reduce its debt. It seems less likely now that Dialog will spin off its Muscat Ltd search-engine technology subsidiary in the short term, as has been suggested previously (CI no 3618).
The company has been working on these initiatives since it reported its full year results in March, and although it claims these are now in an advanced stage, the LSE reacted by forcing its share price down by around 13% Friday. Figures were converted at the May 28 rate of 0.60 pounds to the dollar.
