Comindico's outlook turns bleak
It is understood that Cisco has exercised its rights as majority investor to place the company into receivership, raising the spectre that Comindico will be stripped of its assets rather than allowed to continue operating under new ownership.
Industry sources have confirmed that Cisco overrode the Comindico board's decision to place the company into the hands of insolvency firm Ferrier Hodgson Wednesday, appointing its own receivers, McGrath Nicol & Partners on Thursday.
Ferrier Hodgson late yesterday said it was confident that the business would be able to continue operating under new ownership.
"As a result of the immediate unsolicited level of interest shown from a number of parties, the administrators are confident that the business can be maintained and sold as a going concern," said the insolvency firm in a statement released late yesterday.
Ferrier Hodgson today said it had been in contact with McGrathNicol to see how the company would like to proceed with the matter.
Comindico entered voluntary administration Wednesday after critical negotiations with "equity investors" to save the business failed.
It is understood that Comindico had come to rely heavily on network equipment company, Cisco, which provided seed capital for the business in the form of a vendor financing facility believed to be valued at around AU$175 million.
It also raised AU$175 million in private equity from a pool of investors that included AGL, AMP, Kerry Packer's Consolidated Press Holdings and News Limited division JP Morgan Queensland Press.
By 2001 the company spent AU$300 million completing its network roll-out, including AU$75 million to purchase backhaul links to the U.S. from Southern Cross Cable. In September 2002 it called on its shareholders for a further AU$70 million to invest in its network.
Comindico was one of a number of companies that bet the farm on building profitable businesses around converged IP-based network capable of carrying Internet, data, voice, fax and multimedia beyond the reach of conventional telecommunications infrastructure.
Its contemporaries included coast-to-coast fibre-optic network provider Nextgen Networks which was placed into Administration in June 2003 before and later sold to one of its key investors, Leighton Contractors.
Comindico's customers include Flight Centre, engineering company Pirtek, Norco, the Catholic Education Office and a raft of ISPs.
Administrators are remaining tight-lipped about the state of Comindico's books immediately prior to its collapse but reports on the industry grapevine suggest it was operating with less than AU$1 million in the bank.