I don't think banking covenants have been broken and 'the...

I don't think banking covenants have been broken and 'the company has no choice but to place itslef into administration'


NAB won't be rushed, or pushed
Author: IAN McILWRAITH
Date: 15/03/2011

'iSoft's hard times'

TWO years ago iSoft was being added to the local market's benchmark index, the S&P/ASX 200. Last December, Standard & Poor's dropped it from the 200, and this Friday it will scrub the company from the ASX300.

Yesterday the shares fell below 4? during trading, finishing the day down 0.5? at 4? , a decline of more than 10 per cent.

Not only is iSoft's market worth struggling to hold $40 million, compared to $600 million last May before investors lost faith in its management and direction, a long-contemplated equity issue now becomes even more difficult.

At the end of December iSoft had more than $230 million in debt. Only $33 million was due in the next 12 months (the largest part of which comes from a syndicate that includes NAB's Clydesdale/Yorkshire banks), but reality is that unless its bankers remain convinced that the share price is not reflecting iSoft's internal metrics, that timing could change.

The group already has more than 1 billion shares on issue. To raise $10 million in equity at these prices would mean issuing another 250 million shares  and that assumes it could get an issue away at 4?.

All of which makes asset sales more likely under new management  underlined by the fact that buried at the bottom of iSoft's half-year results was that chairman Robert Moran, who only took on that role in the middle of 2010, was stepping aside for UK-based Bob Ellis, who had been advising it since last June.

He will join iSoft's chief executive, Andrea Fiumicelli, who is also based in the UK, completing the shift in power from former executive chairman Gary Cohen, who copped the market's wrath after a downgrade last June.

In some ways, given the near terminal decline in its ASX share price, investors might begin to wonder why iSoft remains on the local exchange.

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