Zylotech back from the brink

Zylotech back from the brink

IP-security vendor secures funding and its future, with plans to be re-listed on the ASX

Scandal-ridden IP-security vendor, Zylotech (ASX:ZYL) is on track to avoid liquidation and continue trading after finding the funds to recapitalise.

Zylotech administrator from HLB Mann Judd, Andrew Needham, was cautiously optimistic about the current board’s plans and said fundraising efforts through a share release were on track. The company appointed HLB as voluntary administrators on August 20, 2009.

“I’m lead to believe they’ve already got indications that that’ll be fully subscribed when they do put the prospectus out. Then it’s contingent upon the shareholders approving the whole recapitalisation at the meeting on February 4,” Needham said.

“I would think that would be a fait accompli given that if they don’t approve it, it’s going to go down to liquidation and everyone will get nothing…shareholders will get nothing, secured creditors will get nothing and you’d need to cross your fingers that the employees would get their money. This way, everyone is a winner.”

The current board was appointed thanks to a deed of company arrangement (DOCA), which was agreed to on October 15 and executed on November 5. The creditor-ratified agreement was made by directors during voluntary administration. According to Zylotech’s 2009 annual report, it has spent the past few months attempting to recapitalise.

“The capital raising of $2 million proposed by the Recapitalisation Proposal will enable the recapitalisation of the company to be completed and allow it to meet its initial objectives and expenditure plans,” the report stated.

Needham added Zylotech was planning to pursue security surveillance technology as its main asset and at some point in the future may try to invest in other areas of business.

Despite an exceptionally rocky 12 months for the company, he believed Zylotech would probably recapitalise and eventually be re-listed on the ASX thanks to good management and a lack of ongoing expenses.

“At this point in time, Zylotech doesn’t have any employees so I don’t think they’ll be burning through [the recapitalised funds] too quickly,” Needham said. “While you’d never say it’s a hundred per cent sure thing, I think they’ve got an extremely good chance of it all coming together.”

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Tags zylotechvideo surveillanceHLB Mann Judd

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