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February 1, 1987


By CBR Staff Writer

The shock engendered by PPL (Holdings) Plc’s share suspension at the end of November (CI No 572) is nothing compared to the earthquake that hit shareholders, customers and staff on Thursday morning last week when they discovered that on the previous night Price Waterhouse had been called in by the company’s bank to act as receivers. PPL – its former name of Package Programs Ltd described the bulk of its activities – was not the first long-standing company to run into trouble within its first year after going public nor was it the first computer-related business to come unstuck in the North American market, but the speed of its demise was quite numbing. In fact, PPL probably established some sort of record by holding a major product launch on the morning of the day the receiver was called in. One can only assume that the staff involved in the launch were unaware of just how desperate the situation was. Certainly, at a presentation less than three weeks before the boom was brought crashing down(CI No 595), managing director Terry Forrester clearly believed that the worst was over. He admitted that the management had become top-heavy and that its attention had been diverted from the day-to-day business by the effort required to prepare the company for the public flotation last February, but he promised that the restructured board had the situation under control. Somehow, despite the lift of nine major orders garnered in the first four weeks of the share suspension, that proved not to be the case; the expected rescue package – put together by acting chairman Ron Cohen from venture capitalists Alan Patricof Associates – fell through. Neither Cohen nor the Price Waterhouse receiver Peter Padmore will say why, at least for the moment, but it surely cannot be entirely coincidental that Software International, the company that supplied PPL with products that accounted for more than half its revenue, changed hands in late November, days before PPL’s shares were suspended. Senior executives of Software International’s new owners Computer Associates International Inc flew over from the US for discussions about PPL’s future in December, but the company denies it had anything to do with appointment of the receiver. PPL had a licence to sell the Software International range of financial management software until late 1989 and it could well be that CA declined to give potential rescuers any hint of what would happen beyond that date. The receiver should have little difficulty in disposing of PPL’s Sheffield Micro subsidiary, not itself in receivership.


Indeed, on Friday, Peter Padmore confirmed he had already had several inquiries and expects to sell the business soon. The mainframe software divisions, financial management, and human resources with Cyborg products, should also be attractive if licence arrangements can be extended. Excluding Computer Associates, obvious potential buyers, all of whom have financial management and human resources products, include McCormack and Dodge, Management Science America and insurance broker C E Heath’s Peterborough Software. Peterborough’s managing director David Lakin says he will be in touch with Price Waterhouse shortly. The asset sale may, however, be merely the middle of the end rather than the end itself. J Henry Schroder Wagg, the sponsoring broker to the issue is looking at the possibility that Deloitte Haskins & Sells, PPL’s accountants, inappropriately applied accounting procedures to new business in preparing the prospectus for the issue. This is understood to affect the turnover figure for the year to September 1985 which immediately preceeded PPL’s flotation and could lead to Schroders taking legal action against Deloittes. Shareholders in PPL have no chance of salvaging anything from the wreckage unless Schroders does bring such a case and is successful.

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