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Commander to review vendor partnerships

Commander to review vendor partnerships

Commander has flagged potential changes to its vendor line-up following a strategic business review. The integrator was reinstated to the Australian Stock Exchange on October 19 after re-negotiating its bank arrangements and lodging its 2007 annual report. It was suspended from trading on October 1 for failing to submit its full year accounts.

Commander has now brought in ABN Amro and Freehills as advisors to conduct a strategic review of the business. Managing director, Adrian Coote, was adamant there would be no fire sale of its assets but said it would weigh up all potential offers. He said there had been several offers of "assistance" but denied there were firm proposals on the table.

"A fire sale is not necessarily the case - we will look at genuine interest from people who have recapitalization thoughts and who can bring value to the company," Coote said.

He also suggested the company's vendor line-up could be called into question. Commander's vendor list includes HP, Acer, IBM, Cisco and CA. "We're looking at the cost structures of the company. This doesn't necessarily mean staff cuts. It's more about making operations more efficient, and looking at things like vendor selection," Coote said. "We'll look at our key vendors. It's good for a company to look at these things. It doesn't mean we're unhappy with all our relationships."

Coote said Commander would establish a data room in the next couple of weeks to provide interested parties with information on the business.

"We have to consider what's in the best interests of shareholders," he said. "There's been a lot of speculation. One thing our board has to consider is our disclosure obligations. But it's been hard sitting quietly and not responding to those claims.

"Now that we're back online, this changes the framework. We have the banks supporting us and have a line of finance appropriate to our needs."

In a statement posted to the ASX last week, the company said it had re-negotiated its financial facilities to $385 million. Its banking agreements had also been waived prior to June 30 2007. Despite this, Commander's $225m debt to financiers has appeared as a current liability.

"It should be noted that at the date of this announcement this treatment does not accurately reflect the state of affairs of the company, as the terms of Commander's banking facilities have been re-negotiated such that apart from a short term working capital facility of $20 million, the facilities are not current liabilities," the company stated.

Commander reported full-year revenues to June 30 of $1.089 billion, with pre-tax earnings of $67 million. The company experienced a net loss of $5.3 million. As previously reported in ARN, it blamed the lacklustre financial performance on troubles with its transaction processing systems and the slower-than-expected rollout of its franchise network.

The company has set EBITDA guidance for the 2008 financial year to between $67 million and $75 million.

"The board and management are acutely aware that the performance of the company has not met the expectations of shareholders this year and we are committed to turning this situation around in 2008," Commander's annual report stated.

Commander shares, which were suspended at $0.59, were trading at $0.42 on October 19.


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