UPDATE: Siltek shuts up shop
- 27 July, 2001 10:32
Embattled distributor Siltek Asia Pacific is no longer trading and has been reduced to a skeleton staff as administrators from accounting firm Prentice Parbery Barilla look at options for the business.
The company was forced to cease operations after financial support from the South African parent company was severed on Wednesday in the wake of sustained trading losses.
Administrator Steve Parbery told ARN there were two possible outcomes for Siltek. He is still continuing talks with two interested parties for the sale of the business. But the more likely scenario sees Siltek plunged into liquidation, with creditors -- including around 70 redundant staff -- left to squabble over the proceeds of an assets sale.
The company was burning money and without capital backing it all had to come to end, Parbery said. "We have effectively mothballed the company to cease trading losses," he said.
About 40 to 50 staff were let go, according to Parbery, but there are "about 20 left" to assist with the ongoing administration of affairs.
According to sources in contact with ARN, the news of Siltek's demise comes after negotiations between the distributor and two prospective buyers broke down earlier this month. Parbery said negotiations are still open with two parties, which ARN sources attest are the Australian operation of Asian white-box and components distributor Synnex and a consortium led by former Siltek CEO, Hugh Evans.
Parbery was not prepared to comment on ARN's understanding that Siltek closed its doors with debts in the vicinity of $10-12 million, an estimate provided by a former employee of the company.
"I have only just been introduced to the situation so it is very early to know exactly what the situation is," Parbery said.
ARN sources claimed Hewlett-Packard is Siltek's largest creditor, with between $5-6 million in outstanding debt. The source estimated there was approximately $6-7 million worth of stock on hand and $7-8 million-worth of debtors' accounts. It was also confirmed that the company had been "losing money every day for months", despite revenues of about $4-5 million per month.
Parbery claimed the true picture would take "some time" to become apparent. He said a massive stock-take is currently taking place and there were myriad terms of trade to be sorted, including a quantity of stock which vendors have retained ownership rights until payment has been received.
"We won't know exactly what the position is until we have examined all the terms of trade," Parbery said. "Wherever terms of trade allow, we will be looking to return stock. Any information you have received in relation to the financial position is likely to be erroneous."
Hewlett-Packard is the parent company's biggest vendor partner in its core South African operations, according to sources.
At the time of posting this story, HP was unavailable for comment.