Debt sinks Eftpos firm ProvencoCadmus

Receivers try to sell business as a going concern

Debt-laden electronic payment firm ProvencoCadmus has collapsed into receivership with no obvious buyer in sight.

ProvencoCadmus employs about 150 people in New Zealand and 30 overseas. The receivers said job cuts were possible but unlikely in the immediate future.

They are trying to sell the company's businesses as going concerns and say it is business as usual for customers and suppliers.

The receivers would try to sell "what we believe to be an iconic business".

Leading Eftpos company Paymark said it was "not interested" in ProvencoCadmus.

ProvencoCadmus chairman Rick Christie said failed attempts to secure further funding from major shareholders Todd Capital and Navman founder Peter Maire were the final nail in the coffin.

"An unsustainable debt burden, sluggish investment and product markets and a weaker-than-expected trading performance has combined to stop the company from achieving the strategic objectives set by the board."

Only days after issuing an urgent plea to the market for additional funding for working capital until investors could be found for a capital raising, the listed eftpos distributor said it had called on ANZ National Bank to appoint receivers.

Michael Stiassny and Brendon Gibson of KordaMentha have been appointed receivers.

Trading in the stock was halted yesterday and has now been suspended by the New Zealand exchange.

The company, formed last year from the merger of Provenco Group and Cadmus Technology, had about $45 million of debt, which had become unsustainable amid weak markets and poor trading, Mr Christie said.

Placing further strain on its cash position was more than $6m worth of interest on bank loans.

ProvencoCadmus' market capitalisation was only $7.5m when the trading halt was announced.

ANZ was banker to both Provenco and Cadmus before their merger in May last year and has continued to support them since. ProvencoCadmus' facility with ANZ was due to expire at the end of this month. Directors said the merger had taken too long to implement partly because of regulatory hurdles while the economic environment had weakened, making things far tougher for ProvencoCadmus.

Post-merger, even though more than $20m in savings were achieved, that was still not enough to save the company from a $26.5m after-tax loss for the December half.

Debt is split, with about $29.4m owed to ANZ and $14.6m in capital notes.

Christie said the company had needed between $10m and $15m when it turned to the market in search of $5m in working capital.

"We didn't want to have to keep going back to the pump every five minutes.

"We felt that $5m would probably see us through the next stage of the [restructuring] strategy, but we couldn't find it so that was that."

Receivership followed the renewal of key contracts with overseas partners, new business in Hong Kong, and potentially China, and certification of its Eftpos terminals in New Zealand with key clients and ETSL.

Stiassny said it remained "business as usual" for ProvencoCadmus Eftpos customers and suppliers and he reinforced that it was only the holding company, not its subsidiaries, that was being sold.

"This company has been through a merger and there have been questions asked about its viability for a very long time.

"What's really happened is there's some certainty, some finality and clarity to the situation," he said.

A list of potential buyers threw up a mix of local and international players.

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