Eisa's salvation hangs in the balance
- 28 September, 2000 15:16
Politely noncommittal, Andrew Love of eisa administrators Ferrier Hodgson spoke on Wednesday of the pending $13 million Austar take-over as if it was a forgone conclusion.
The deal's fate will be decided at a creditor's committee meeting scheduled at 10.30am today, by a panel of the five major creditors including, Telstra, C&W Optus, New Skies, Primus and KPMG, who were appointed at a statutory creditor's meeting on Wednesday.
According to Love, creditors represent approximately 90 per cent of eisa's total outstanding debts, which are in the ballpark of $6.6 million. All it will take is a majority vote of three to tip the scales.
The pay-TV and Internet service group is owed $7.5 million by eisa and sees the take-over as a means of recovering its losses. At a press conference yesterday, Love said he will be encouraging creditors to accept Austar's offer today. "There are compelling reasons why the transaction should go ahead and the alternative will inevitably, in my view, result in a receivership. There are no other offers.
If the committee agrees to accept the take-over bid, Ferrier Hodgson will approach the courts next week for approval and the deal will be finalised, along with the investigation into eisa's affairs, by mid October.
With the current offering at $13 million rather than the originally proposed $24.4 million, eisa's elusive founder and major shareholder, Johnson Wang, will be forced into bankruptcy court next week. Love says he has not been in contact with Wang to date however, as the investigation progresses, he may have the desire to speak with him. At the moment this is secondary to dealing with eisa's former chief executive, Damien Brady, who is being pursued by the ISP through the courts for $230,000 in alleged expenses he squandered.
In the meantime, eisa will continue to operate, Telstra and Optus will continue to supply data services, and there have been no staff cuts. The subscriber list of 80,000 is still intact although, Love says, they are now worth much less than the price they were valued at before the April tech stock correction.
Love says the latest eisa figures showed a monthly loss of $500-600,000, a significant drop from its previous plummet of $2 million. However, even if the Austar take-over goes ahead, there is no guarantee that any of the creditors will recover their funds. Love predicts they should receive a 45-60 per cent return and has confirmed there will be nothing left over for shareholders.