Commander plunges by nearly a thirdEmail Printer friendly...

Commander plunges by nearly a third
Email Printer friendly version Normal font Large font Matt O'Sullivan
October 20, 2007

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COMMANDER Communications shed almost a third of its value yesterday in its biggest one-day fall in seven years, despite management's attempts to generate interest from potential buyers.

The small-business telecommunications provider has officially put itself up for sale, but some analysts doubt it's a bargain even at a third of its value six months ago. Yesterday shares in Commander plunged 29 per cent, or 17.5c, to 42c as it resumed trading for the first time in almost three weeks after a suspension for failing to lodge its statutory accounts. Almost 30 million shares - or about 13 per cent of its issued capital - changed hands in heavy trading that surprised some analysts.

"It's clearly a case that the company is in crisis [and] people have decided that this recapitalisation process must entail some risk," Mark McDonnell, a BBY telecom analyst, said.

Commander's bankers threw the company a lifeline this week after agreeing to extend its line of credit by another $25 million, taking its total banking facilities to $385 million.

JP Morgan described the heavily indebted Commander as "in the eye of the storm" because it will need to raise more, given its precarious cash-flow position.

The IT supplier will open its data room to potential buyers as early as Monday in a process aimed at securing a strategic investor rather than an outright sale.

JP Morgan said it doubted that other phone companies, such as Optus and AAPT, would acquire Commander because of the complexity of integrating its business, while private equity firms would be interested "only at a distressed price".

More than $370 million has been wiped from Commander's market value since it issued the first of three profit downgrades in early May, leaving its worth yesterday at just $96 million.

Analysts have also called for Commander's management team, led by Adrian Coote, and board to be made accountable for its fall from grace should it remain a stand-alone entity.

http://www.smh.com.au/news/business/commander-plunges-by-nearly-a-third/2007/10/19/1192301043389.html