The news followed an unexpected profit warning from the Amsterdam, Netherlands-based company last Friday, when it said that earnings before interest, tax and amortization for full-year 2002 would be 106m euros ($114m), which was some 15% lower than it had forecast just one month earlier.
The company did not offer a clear explanation for this, but said that it would be hit with goodwill impairment charges of 375m euros ($403m), having previously claimed that the total would fall between 275m euros ($295m) to 400m euros ($430m).
Much of this goodwill relates to its $1.4bn purchase of Wang Global in 1999, which saw the company triple in size through a deal that was designed to transform it from a European PC reseller and support services company, into an international desktop and network services player. Although Getronics now makes some 70% of its sales from recurring services business, it has struggled to reduce the debt mountain it accrued from the acquisition amid tough market conditions.
Getronics has drafted in two financial recovery experts to try to turn its fortunes around. Axel Ruckert, 56, and Klaas Wagenaar, 44, have been appointed chairman and vice chairman respectively. Ruckert, who takes responsibility for customers, strategy and operations, previously oversaw restructuring at Groupe Bull SA and Philips Consumer Communication. Wagenaar, who will focus on improving the company’s financial performance, previously held positions at Cap Gemini and Baan.
Investors had lost confidence in Getronics’ management to the extent that its shares traded at 0.12 euros on the Amsterdam Stock Exchange this week, giving it a market capitalization of just $50m despite full-year 2002 sales expected to be in excess of $3bn.
If Getronics manages to make significant inroads into its debt, the company could become an acquisition target for Dell Computer Corp, a long-term Getronics partner that has made no secret of its ambitions to expand in services. Getronics spokesperson Herbert van Zijl told ComputerWire that the company would not make any further comment until it announces final results for the year on March 4.
Both Ruckert and Wagenaar support Getronics’ latest debt restructuring plan. Earlier this month more than 60% of Getronics bondholders said they would back a plan to buy back 589m euros ($632m) in bonds in a cash and share swap deal. After an earlier rejection, Getronics sweetened the deal, offering bondholders 75m euros ($81m) in cash and an 81.5% stake in the company. It plans to issue as many as 11.3 billion new shares, diluting ordinary shareholders’ stake in the company to just 3%.
Source: Computerwire
