Powerlan dumps debt on distributors

Powerlan dumps debt on distributors

The channel is reeling from Powerlan's exit from the reseller business, following Theo Baker's shock decision to wind up the shell of the old Powerlan Qld business and place it in voluntary administration.

KPMG will sift through the remains of the former Powerlan Qld business, but creditors are unlikely to see any of the millions of dollars owed by the Powerlan subsidiary.

A spokesperson for Powerlan said the company was purely a shell company and the decision to put it into administration would free up management to focus on Powerlan's core business. Not surprisingly, Powerlan's creditors, many of whom are channel companies, feel they have been betrayed by the once high-flying reseller.

"I understand why they did it, but to try and hide the fact that they are leaving their creditors high and dry is not on," one creditor told ARN. "It's a tough enough market at the moment without these sorts of things going on."

To add insult to injury, the majority of the Powerlan Qld outfit was sold two weeks ago to NetOptions and the administration in no way affects that business. "We continue to conduct our business normally," NetOptions managing director Richard McAlary told ARN.

Powerlan managing director Theo Baker refused to comment on the loss of goodwill. "It is completely out of my hands and now sits with the administrators," he said. "We want to focus on the software products. We clearly articulated our strategy in closing our non-core and reseller business months ago."

The company also encompassed two joint ventures between Powerlan and integrator Data#3, Queensland Desktop Services (QDS) and Queensland Software Services (QSS). The desktop venture was formed seven years ago to provide IT products and services to Education Queensland and Queensland Health. Data#3 partnered with Powerlan again in 2000 to form QSS to service a four-year Microsoft Enterprise Licensing Agreement with the Queensland Government in a deal worth $77 million.

Data#3 is now in talks with KPMG to buy Powerlan's share in these joint ventures.

"These actions by Powerlan Limited and ANZ Bank have triggered options in the QDS and QSS joint venture agreements for Data#3 Business Systems to acquire Powerlan Qld's interest in the joint ventures," the company said in a statement. "Data#3 is currently considering the exercising of those options."

Powerlan has turned its back on its reseller origins, generating most of its income from offshore software sales. Baker said although the reseller business has served Powerlan "reasonably well" the time had come to move on.

"They are our roots but that business has changed significantly," he said. "It has reached a point where every vendor is going direct and undermining their resellers, and profit margins are going through the floor."

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