http://www.smh.com.au/news/xchange/alcoa-quietly-building-its-ban...

http://www.smh.com.au/news/xchange/alcoa-quietly-building-its-bank-after-alcan-loss/2007/10/09/1191695909145.html

Optus seen as bidder

Optus is emerging as the most likely candidate to show an interest in buying part or all of the struggling small-business telecommunications provider Commander Communications.

Commander is expected to open its data room to interested parties this week, at the same time as the former Telstra subsidiary resumes trading on the sharemarket almost two weeks after it was suspended for failing to lodge its statutory accounts.

More than $300 million has been wiped from its market value since late April as major shareholders fled the stock in the wake of three earnings downgrades.

"It's a narrow field," a BBY analyst, Mark McDonnell, said of likely buyers for Commander.

Optus is considered the prime candidate because it is a player in the information technology and small-to-medium enterprise segments and would be considered keen to tap into Commander's large customer base.

Although SP Telemedia (which trades as Soul) has been touted, analysts doubt this scenario eventuating because it is busy elsewhere.

Telecom New Zealand is also considered an unlikely buyer because its new chief executive, Paul Reynolds, is preoccupied with the forced separation of its business into three units across the Tasman.

Although the boss of Telecom NZ's Australian operations, Paul Broad, has indicated an interest in Commander, he would have a task convincing the parent company's board to part with more cash less than six months after its purchase of PowerTel.

Which leaves Optus and private equity firms such as CHAMP and Archer Capital as the top candidates to be tapping on Commander's door for a squiz at the books.

BBY's McDonnell said the biggest problem for any potential buyer would be Commander's large level of debt, given that the company does not have the operating cashflows to sustain it.

Commander's net operating cash flow went from $40 million in 2006 to $7.6 million in the red last financial year despite a substantial increase in customer receipts.

Despite this, opportunities no doubt exist for a takeover, since Commander's share price last traded at 59.5c, less than a third of its price six months ago when rumours abounded of Optus showing an interest.