STRUGGLING telecommunications and technology group Commander could hold a $150 million fire sale of its assets as early as next week amid growing pressure from its banks to pay back up to $70 million.
The company remains in talks with its bankers, led by Westpac, after breaching a number of its loan covenants and investors have growing concerns about Commander's cash position.
In August, Commander said it was seeking an extra $20 million from its bankers but did not give any further details of its financial problems.
The company posted a loss of $5 million for the financial year after a $26 million profit the previous year.
Commander said in August that "the lower than expected profitability in FY2008 ... has placed pressure on the company's funding arrangements".
Two months later there is still no resolution, with banks believed to be seeking between $60 million and $70 million in re-payments over the next six months.
Commander's shares were suspended by the Australian Securities Exchange on Friday after it failed to lodge its annual report. The company blamed the delay on a "meltdown" of its automated payment system.
The group's shares were trading at 59.5c, valuing the company at $136 million, when they went into a trading halt, 77 per cent off their December 2005 high of $2.55.
In recent weeks, investors have lost faith in the company with long-term holders of the stock Perpetual and AMP selling out. Most recently UBS Nominees also baled out after accumulating more than 5 per cent last month.
Industry sources have suggested that Commander's auditors are having difficulties signing off on the accounts, in particular, the part that states the company is a going concern.
It is also understood that Commander is in ongoing discussions with a range of parties who are interested in all or part of its business, although no formal sale process has yet been launched.
But insiders said a sale process could be launched shortly, once its accounting issues were resolved.
Commander's other option, if it remained solvent, was to undertake some form of fundraising which might include taking on a new equity partner, people familiar with the company said.
Optus and Telecom New Zealand's Australian subsidiary AAPT are both understood to be interested in the company, which specialises in providing telephony and data services to the small and medium business market.
Optus has been circling Commander for the past three years, hoping to seize the company and bolster its weak position in the small business market.
But as Commander's valuation soared in 2005, putting its beyond reach of predators, Optus formed its own small business division in a strategy later mimicked by its main rival, Telstra.
Powertel, which was purchased earlier this year by AAPT, was in talks with Commander in late 2005 but Commander changed course and instead opted to buy information technology equipment and services group Volante for $147 million.
The problems that Commander has had in digesting Volante in many ways echo those experienced by Telstra's after its $333 million acquisition of Kaz Group in early 2004. Since then Telstra has struggled to get value from Kaz and has sold off many parts of the business with further asset sales still being considered by Telstra management.
In 2003, Commander chief executive Adrian Coote grabbed control of the company in something of a reverse takeover when Commander bought RSL COM, a company he controlled together with a group of senior executives.
The company's board is chaired by one-time Telstra director Elizabeth Nosworthy.
Mr Coote has not returned calls for 10 days, and Ms Nosworthy did not return calls yesterday.
CDR Price at posting:
0.0¢ Sentiment: Sell Disclosure: Not Held
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