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Quadtel business forced into administration

Quadtel business forced into administration

ASX-listed Wytomic Limited, which formerly traded as Quadtel Limited, has gone into voluntary administration for the second time, after failing to overcome a listing suspension.

Administrators, Pitcher Partners, were appointed on September 1, and have now declared the business up for sale. Wytomic provides a range of broadband solutions, as well as distributes computer software and related equipment. It also holds a 7.5 per cent stake in Hong Kong Dragon Industries.

Quadtel was relisted under the name Wytomic on the ASX in March.

The company first went into administration in May 2003, after its board voted to cease funding for its subsidiaries Quadtel International and Marketing Results.

The Marketing Results subsidiary was then acquired by PhoenixIT in June last year.

The financial strain followed a tough 12 months for the company, prompted by the loss of a software distribution deal with Network Associates (now McAfee).

At the time, Wytomic director, Bruce Ind, laid the blame for its declining retail sales to intense competition from rival broad-based distributor, Tech Pacific.

"We have to get away from competing against the likes of Tech Pacific," he said at the time. "They will burn us every time. We have to go back to our roots - to better-margin, niche products."

In its last financial year, the company recorded a net operating loss of $535,000.

After spending six months in administration, Wytomic raised $600,000 by way of loan funds, converted into ordinary shares. This was expected to help pay the way for its acquisition of wireless mobile software company, Original Spin, which was announced in November. This deal, however, fell through in April.

The company then announced its intention to merge with services provider and reseller, Veritel Australia, in July. Veritel resells a range of communications services, including fixed and wireless broadband, mobile telephony and fixed voice services.

While a heads of agreement had been signed, Veritel managing director, Ivan Hurwitz, said the company decided to step away from the acquisition six weeks ago.

"We were interested, but decided it wouldn't happen," he said. "It was similar to buying a car; we then realised the one we intended to buy was a lemon anyway."

Hurwitz said the deal would have given Veritel a controlling interest in the combined company.

"Wytomic was a backdoor listing for us; it would have bought us an ASX listing," he said.

An evaluation of the two companies in July had put Veritel's worth a $9 million, and Wytomic at $2 million, he said. Hurwitz said Veritel management planned to continue to own and operate the company for the foreseeable future.

Wytomic director, Bruce Ind, was contacted for this story, but had not returned calls at time of press.

The administration process and equity sale of Wytomic is expected to take three months.


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