Synergy Plus goes into administration

Synergy has appointed Hall Chadwick as administrators to the business and its subsidiaries

ASX-listed system integrator, Synergy Plus, (ASX:SNR), has been placed into voluntary administration following a creditor's request to entirely repay its financing facility.

Richard Albarran, David Ingram, and David Ross of Hall Chadwick, have been appointed as administrators to the company and each of its subsidiaries including Synergy Plus Operations, Air Data and CCP (Equity).

According to a statement on the ASX, Synergy’s wholly owned subsidiary, Synergy Plus Operations, had a financing facility with GE Capital, which advised the integrator to repay the entire facility on or before April 22.

“As a consequence of GE Capital’s request for repayment of its facility, the company [Synergy], at this time, is not able to proceed with the Bond Subscription Agreement with Pacific Alliance Asia Opportunity Fund as outlined on February 28,” the statement said. “The first $500,000 drawdown of the facility would have otherwise occurred yesterday (March 16).

“Through the administration process under the Corporations Act, the company aims to achieve a speedy restructuring and the lifting of suspension of the trading of shares on the ASX."

It plans to propose a Deed of Company Arrangement to shareholders and creditors that incorporates the combination of AirData’s business and the services business of Synergy Plus Operations, as the only operating focus.

Synergy is continuing its discussions with Pacific Alliance Asia about its restructuring plan and on an alternative funding facility.

In December, Synergy revealed its intentions to change its structure from a vendor-centric product reseller towards services. As part of this, it shut down two branches and retrenched about 35 staff.

At the time, Synergy CEO, Garry Henley, said outside of its core customer focus, it was retracting from the desktop market and retraining and hiring new staff to focus on the annuity business model.

In its half-year 2011 financial report to December 31, the company suffered a $5.5 million net profit loss and earnings before tax dipped $4.2 million. Revenue was also down to $65.8 million compared to the previous half-year, which amounted to $76.8 million.

In March 2009 ComputerCorp purchased Synergy Plus assets for $9.3 million and in November that year, changed its name to Synergy Plus Operations.

Along its journey, the company made a number of acquisitions including the purchase of Leading Solutions, AirData, CP&A, Paragon IT, and Coretech.

Trading in Synergy shares will be suspended, which stood at $0.026 at the time the announcement was made.

ARN has requested comment from Synergy.

Tags synergy plusPacific Alliance Asia Opportunity Fundsystem intergratorGE CapitalCCP (Equity)Air Data (Australia Pty Ltd)voluntary administration

More about ARNCoretechGEGE Capital AustraliaIngram MicroLeading SolutionsSynergySynergy Plus

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48 Comments

Jake

1

very predictable outcome. Bond agreement and services only model was never going to fly given the events of recent months. Another reseller bites the dust.

poor_staff

2

and staff once again left without pay

staff_suffer_again

3

Why is it always the staff that lose out? surely australian companies have to answer "eventually" to somebody on how their staff are treated.

Didn't a certain Ms Gillard spout out some promise in her election campaign? or is that another non-truth

Gareth

4

I'm surprised they even lasted this long.
Best of luck to all the staff.

Lucky...

5

Not surprised, been run by monkeys for some time now

GG

6

Best wishes to all the Synergy staff but in particular the QLD branch. You guys have been amazing to work with and I hope you can find another job asap if it comes to that.

Laters
GG

ABC123

7

I bet they are warm and happy in their house tonight and have had a great meal ! What about the staff who wont get paid ..... Where are their next meals going to come from ?

[Comment partially edited - ARN]

Last Exit

8

While I feel for the employees involved, who do you blame when you're on a bus that goes over a cliff? The blind guy behind the wheel or the passengers for staying on-board?

Staff aren't always privy

9

@Last Exit. Not quite the same. Staff are not always privy to the finer financial details of an organisation and the true state of affairs is not always obvious or relayed completely.

I worked for a company on the east coast that folded a month after i started and surprise surprise they didn't tell me the financial details in the interview.

While i agree to some extent that you need to be savy, sometimes other factors can make the option to jump tricky

Last Exit

10

It's a publically listed company, everyone has access to the financials.

duck

11

What's that saying.. "if it walks like a duck, talks like a duck and looks like a duck it probably IS a duck" pretty predictable this would happen, but like the others feel for sorry for most of the staff who would not have been aware of the financial situation.

boohoo

12

staff-smarf
they all knew the situation - suppliers have had them on hold for months - only ones that are left could not get a job elsewhere - IT Darwinism

Loyalty

13

When the company you work for years goes through a rough patch, you don't think of jumping ship, you think of how you can get the situation improved, you work harder. If everyone jumped ship everytime things got tough than no one would be working for anyone. I don't feel sorry for the staff out of work, but I feel sorry for hard work & pride put into a failing project. And as for the services direction that Synergy took,' when you have lemons you make lemonade' When you have no product, you sell your services.

Jake

14

agreed it is sad about the staff being left high and dry. However the warning signs have been evident for months/years. What i found as an insider is that most staff had no idea about what the business did and how it operated . Had they taken a wider view of their job they would have seen the overall lack of quality within the business, appallingly bad management al all levels, constant indecision and complete inability to execute well.
This all adds up to the inevitable conclusion we see today.
I got out (after 15+ years) with my entitlements fully paid but i had to make that decision recently based on all the evidence i described above. If you don't see it then you cannot make that decision.

Mark Winter

15

Its just another one down.....I certainly feel for their staff and if any of them are looking for a role in the Wireless and RTLS space let me know http://www.seek.com.au/Job/channel-business-development-manager/in/sydney/19304969.

Got out in time

16

Very unfortunate for staff......, but the writing was on the wall for at least 6 months ago. You can only blame yourself for not making the move ealier. There many opportunities out there, just need to move on.

As for Management & Board members your a disgrace.

One of the many

17

As one of the employees in question I can honestly say that not all of us stayed on due to lack of job offers. I worked with some truly gifted engineers at Synergy in the Perth office, and job offers were a common occurrence.
I think I can say on behalf of all of us that the team that we had formed was incredibly strong, and walking away from Synergy was also walking away from them. I know I stayed as long as I did, despite all the warning signs, for the people I was privileged enough to work with.

ex employee

18

Saw the writing on wall 2 & 1/2 years ago when I left. Shame but surprised they have batted on this long.

Amused

19

For those staff that have lost their jobs, a sad affair. To address got out in time I agree the Board and Management have a lot to answer for. aquisitions of some of these companies offered no financial return. Some one has to be held responsible for the demise but as usual the Creditors, minor shareholders and staff are once again the ones who loose out.

Disgusted

20

I'm disgusted - not at Synergy but the negative comments about staff who stayed. For those of you who 'jumped ship' perhaps we kept people like YOU for too long which only helped the demise! And for the record, no one has TECHNICALLY lost their job yet. Comment on the company all you want, but stop making it out like the staff were stupid for staying! And YES that is coming from someone who stayed and does not regret my decision. Yes the situation now is very unfortunate, but picking on the poor staff is not going to achive anything so perhaps back off with your negative opinions.

Another

21

And another IT org goes west - PIVOD

https://webmail.allcomnetworks.com.au/owa/redir.aspx?C=c3b77097a49644af8078c01b598818f2&URL=http%3a%2f%2fwww2.search.asic.gov.au%2fcgi-bin%2fgns030c%3facn%3d088_220_937%26juris%3d9%26hdtext%3dACN%26srchsrc%3d1

Shaz

22

We've seen "executive/senior management" and "directors" who have come, made empty and unrealistic promises, spend A LOT of money reinventing the wheel and got paid obscene amounts of money.... some still existed at the end, but ultimately ALL of then FAILED!

The staff who have been let down, a lot of us made up an incredible team - loyal and hard workers, nationally...... I wish everyone the very best of luck.

goodwill??

23

I would love someone to explain to me the valuation of intangibles in the Oz IT market. The former computercorp shell carried $15m of intangibles in their balance sheet and now under synergy its almost $20m.....for a reseller!!!

Ridiculous.. and when the entity goes into adminstraion what is that goodwill worth... zip. Interestingly, Anittel carries $27m of intangibles in their balance sheet.. (all public info)

Auditors should be held accountable for these ridiculous valuations as they are distorting figures in the all industries.

OMG

24

The ComputerCORP / Synergy past must be taken into consideration before belittling the glue that stuck that place together (the staff). Directors, Senior Managers, CEO's and even chairmen.. How many changes must one organisation go through before the wheels ultimately fall off? How can staff be held accountable for decisions made by upper management?
As a staff member, I saw the cracks appearing but stayed for very different reasons...Not because I was "blind" or "couldnt get another job" (truley, thats just rude) but for my CUSTOMER!!!!!!!!!! The roles we take in Reseller land are supposed to have a customer focus. Something that this industry has clearly forgotten. I stayed for my customers, because they are important to me!
If anyone is to blame for this its people in sales jobs that "ambulance-chase" deals and drop their margins to 1 or 2% just to make a sale.... The vendors (haha - creditors) are even worse, playing people off against each other. For what? No profits and more bottom line losses. And management that push for results no matter how profitable its going to be or not.

The staff are family, we spend more time with each other than our own loved ones...so its hard to walk away.
To all the staff, be safe and strong.

LB

25

Heylo GG, now your list will be final and long......would have like to have the chance to say goodbye to lots of my colleagues. I hope BB is reading this and find way in keeping in touch.

Ex employee

26

I do feel sorry for the staff , there are some good people there. What outdid the company in my view was arrogance by senior management. Completely no staff management. Reliance on a few high profile customers. They did'nt look out of there window and see the changes in the IT landscape and lost touch. We can do everything simply does not wash these days. Spent the last 12 months more interested in acquisations to cover lost revenue then growing their core business. Good luck old collegues.

jake

27

i think there is a lot to be learned from the demise of Synergy - i would encourage all resellers, management and their staff, to read these ARN comments ( and other press releases,comments ).
Most of them are very accurate and describe the problems that were never resolved, the consistent weak and ineffective management , the inability to transition the business as the market changed. All classic business challenges but so easily misunderstood.
Another big lesson is that staff should make an effort to know more about the business they work in, how it operates, who are the key people, what is the financial state, clients, markets etc. Better informed means better decisions all round and should lead to a more successful business.

Bill

28

SHOW ME THE MONEY!!!!

Iceberg ahead !

29

Watching the demise of Synergy was like watching a repeat of the SS Commander being driven at full speed into the iceberg.

RIP CT

30

Best of luck to all those in QLD and particularly from the Coretech group. Also best of luck to everyone else that were great support over the more recent Synergy years.

Pleasure working with you all over the years.
Hopefully for all staff involved that entitlements are sorted out as quickly as possible.

Ross

31

I came on board only late last year with Synergy and the boys over at the Belmont Warehouse.

Things were busy, we weren't on credit hold and it was only when the board made the decision to re-trench sales support staff (just before Christmas I might add - smooth work...) that things began to be noticeably dis-heartening, but by the time people had seen it was perhaps time to move on to more secure and stable things it was too late, we would still be in the position of not being paid.

The guys in the warehouse were not privy to the desktop talk that went on in Stirling, we heard everything second hand. Difficult to judge speculated assumptions.

I liked my job, and i liked (most) of the people I worked with, it's a shame that because of poor and late business decisions that a team like this was dissolved.

Good luck to everyone with their future endeavorers, it was fun while it lasted.

ex c-corper

32

Reply to: OMG - comment 24
"As a staff member, I saw the cracks appearing but stayed for very different reasons...Not because I was "blind" or "couldnt get another job" (truley, thats just rude) but for my CUSTOMER!!!!!!"

very nice of you to put people before yourself... but i really don't think your customer cares that much about you now when your bills are stacking up and childrens school fees are due....
you should have taken your customer somewhere where you could provide them a better quality of service while you too enjoyed the benefits of a better class employer..

But don't worry about your customer now.. the other resellers have already picked up where you left off.. I must thank you for all the open opportunity you have left us all.

FBL

33

Old retired staff member
If it had not been for the dedication of the staff at Synergy the company would have died a couple
Years ago you can say the customer don’t care now but without Customer service you have no company . So if you take over our customer please take care of them .

tax man

34


It is interesting that Synergy owes the ATO over $30million and Hyro, the previous owners of Synergy, were also recently on a trading halt due to an unpaid tax debt. Is there a common theme here and if there is will these fat cats be held accountable?

Amused

35

$34 million in debt before you go in to Vol Admin.
Were they trading insolvent?
Why were they still purchasing other companies if this is the case.

Jason Ward

36

While I'm not surprised of the shamefulness peoples anonymous internet posts (post 17 was me by the way), I am still disgusted. To those of you that feel the need to laugh and gloat about hundreds of people losing their jobs, whether or not it was their fault, you should be ashamed of yourself.
Would you kick a homeless person and laugh at him cry? Of course not, because you'd have to look them in the eyes as you did it. We are talking about real people here, that now need to work out how to pay their mortgages and feed their families.

Being anonymous doesn't make you strong, it makes you cowardly.

To all of my co-workers hang in there. We all have experience fighting for what we believe in, and we all have each other at our backs.

Jason Ward

misread

37

@tax man.

It doesn't say they owe ATO $30m....it says :

The secured creditor, GE, is owed $4 million, and other creditors INCLUDING the Australian Tax Office (ATO), are owed more than $30 million.

David Moore

38

Re Taxman - good observation. isnt it a coincidence that there is one common boardmember between Hyro and Synergy, the same one who sold a business worth $1.79 to Computer Corp for $9m Now all of his companies are in administation. He should not allowed to be a Director IMO!

Interesting...

39

@ Taxman and David Moore.
It was an interesting read seeing the downfall of both and the common member involved.

Wonder if said person will front up to the creditors meeting to try and claim their share as listed.

Its disappointing what has happened to the company. The staff were a good team boosted every 6-12 months with the news of a new Acquisition, or Management Hire, or board member that were going to "Transform the Business" for the end result we have today.

123

40

comment 38,
I totally agree with you, someone has been filling their own pockets and has run both companies to the ground.

The board members need to be accountable. Apparently management members of Synergy were getting pay raises while others were loosing their jobs in Dec. What a joke, look who laughing now.

Graham Garrow

41

@ Boohoo, we stayed because the customer was priority. When they called, we answered. You were obviously let go for a reason or you quit because you were oblivious to the fact that selfworth actually means something. Sure, it was easier to bail but I personally feel better because I stuck it out to the very end for my customers.. Can you say the same?

@ LB, if I had access to my work laptop, the list would be HUGE.. Call me. We'll discuss it over a beverage, my shout :)

Ex staff

42

Is anyone who worked there really surprised it has come to this ?

Poor management, no leadership and piss-poor execution.
Morale issues and high staff turnover meant that the corporate "IP" that grew the business was flushed down the drain years ago. You can pinpoint the start of the demise when MM left....

ComputerCorp's aquisitions were all troubled to some degree and all failed to add value - since listing CC 'bought" perhaps 50M worth of turnover, but the overall company turnover is LESS than it was 5 years ago. That takes reall SKILL LOL.

The published financials show a company that has been financially sick since listing, in particlualr the goodwill figure was a joke, how can you carry that much goodwill on the balance sheet when the business had a track record of major losses.

Pathetic running of their services business helped the collapse - for example just look at the demise of the ACT services business between 2007 and 2009 when "management" decided it could be run without a TSM - the end result - no service business at all in the ACT

And it's now clear why management was in such a hurry to close the Canberra branch late last year - they knew they were going to loose their GE credit facilty and therefore wouldn't have the cashflow to fund the 25M worth of hardware business coming from the ACT.

WA Staff

43

To all incompetent manager out there and the ones who existed @ ComputerCORP/Synergy post (excluding HS and RR), LISTEN to your staff and stop reinventing the wheel!!!!

The company had an excellent team across the country who did not have a voice because incompetent "managers" came in and thought they knew better. The services teams (ie workers) across the country could have run the company better than those highly paid jokers!

DT

44

Obviously a lot of the staff believe they could have run the company better than the incompetant management.... but the million dollar question is....

could you have turned a profit with a business that got most of its revenue from hardware?

LB

45

Hi GG

E M A N U E L - remember this? I can't call you because I ain't got your number! It look like we loose contact forever....It has been nice knowing and chatting with you.

Take care!
:-)

Daniel van Niekerk

46

I must say I find it disgusting the way some people seem to be taking pleasure in this. I worked at ComputerCORP from 2004-2006 and only left to move overseas. In that time I got to work alongside some really talented and knowledgeable people. Like Jason said, why kick a homeless man when he's down? Are you that petty that you gain pleasure out of rubbing salt into others wounds?

Posted under my real name because I'm not a coward like some!

MC Hammer

47

I stayed there until the end. I guess that some of us are just too legit, too legit to quit...

Businessman

48

What a lot of people don't realise is the history of these companies (all of them) they all at one stage made $$$$. These companies and there staff got used as vehicle to make money 2-3 key people made alot of money from floating computercorp years ago they floated, they hung around for 6 months and then they cashed out. Those people! Knew! They made there money and left, customers and "IT" are no longer importAnt to a newly floated company making dollars is! It doesn't matter if it's an IT company or lemonade stand this "group" of companies was a vehicle to make cash and it worked for the 2-3 people involved. From that point on the company was never going to survive. This happens everydY in the business world. Upper management don't care about customers they care about cash and everything those 2-3 people did was technically legal.

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