WA wholesaler strapped for cash

WA wholesaler strapped for cash

Within weeks of reporting poor financial results to the Australian Stock Exchange, listed white-box manufacturer and components distributor Worldwide Technology Group (WWT) has announced plans to raise further capital through the share market.

WWT distributes a range of computer components as well as its own line of machines under the NCL brand, which are produced by its Singaporean subsidiary, DP Computers.

According to a statement by director Boon Seng Tan, the capital the company is hoping to raise is "intended to enhance its core business as well as launching new lines of memory products".

But according to the most recent financial reports released in mid-March, the company has very little cash to operate with and may need funding just to see out the year. As of December 31, WWT had $1.2 million in cash, but $12.7 million in "interest bearing liabilities" (borrowings) due to be repaid in the next 12 months. Additionally, the company reported having around $6.5 million in long-term debt.

Although the company's half-yearly revenues grew to $31.5 million in the last six months, it posted a loss of $19.7 million for the six months to December 31, 2001. The results have pushed the company's share price from around 15 cents in mid-2001 to its current price of around 2 cents.

WWT has appointed independent financial advisers to aid the fund-raising, and will also undertake a restructuring exercise to "streamline its operations".

The company had been approached by acquisition company Galena in January 2002, offering a share swap deal to WWT investors. The directors of WWT advised shareholders to reject the deal, and Galena pulled out of the bid in late February after failing to attract enough interest from shareholders.

The source of the group's financial problems is unclear, but a senior manager at a WA-based channel company said there had been speculation that WWT was in financial difficulty ever since it was burnt to the tune of $200,000 with the collapse of WA distributor Y Micro. Y Micro was placed into administration in May 2001.

Boon Seng Tan refused to discuss the company's position, saying that it would be "premature" and in breach of several non-disclosure agreements. However, an employee of Worldwide Technology Group told ARN it was "a difficult time" for the company.

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